Stocks News
- Govt. to punish firms over GF listing
Date: 31-May-2007 Sources: (Shenzhen Daily)
THE government will punish firms and officials for inadequate disclosure surrounding the so-called backdoor listing of GF Securities, as part of a crackdown on growing irregularities in the domestic stock market.
In some of its toughest measures to deal with insider trading and improper disclosure, the government said yesterday it would impose administrative penalties on a number of companies involved in the listing of GF.
It will punish Shenzhen-listed Yan Bian Highway Construction Co., the reverse takeover target used for GF Securities' listing, Jilin Aodong Medicine Industry Group, a key stakeholder in GF, and other firms for improper information disclosure.
The China Securities Regulatory Commission (CSRC), the country's top securities watchdog, also suspected that several people may have conducted insider trading during the backdoor listing process, the China Securities Journal said yesterday.
'During the investigation, the CSRC has handed over evidence and clues related to insider trading to the police,'the newspaper cited a CSRC statement as saying.
The Caijing, an influential domestic financial magazine, has reported that the investigations also involved GF Securities officials.
Officials at GF Securities, headquartered in the southern city of Guangzhou, could not be reached for comment despite repeated attempts to contact them.
The crackdown is widely seen in the market as part of a drive by authorities to cool rampant speculation in domestic stocks.
'The government is sending out a clear message to the market. It wants to clamp down on stock speculation and insider trading,'said a top fund manager at a Sino-foreign mutual fund house.
Early yesterday, the Ministry of Finance announced a hike in the stock trading tax, triggering a tumble in the prices of A shares.
The harsh measures also come as the government opens its fledgling securities industry, which was rocked by a series of scandals in recent years, to greater participation by foreign investment banks.
The government plans to resume issuing licenses to foreign firms for securities ventures in the second half of this year. Citigroup and Merrill Lynch are tipped to be among the first beneficiaries, industry sources said.
The CSRC began its probe in mid-2006 after shares in Yan Bian Highway soared before it announced June 5 that GF Securities, the country's sixth-biggest brokerage, would list by taking over Yan Bian, domestic media said.
GF was the first mainland brokerage to announce it would list through a reverse takeover, and the announcement lit a fire under the shares of listed companies rumored to be reverse takeover targets of other securities firms planning such backdoor listings.
In recent weeks, the CSRC has announced a series of punishments of listed companies and their executives, as well as a fund manager and a securities analyst, for insider trading, poor information disclosure and other breaches.
Earlier this month, JP Morgan's China asset management joint venture said it had fired Tang Jian, a senior fund manager, because he was under official investigation over stock trades.
Among the biggest losers in yesterday's rout were shares of listed brokerages and of companies with stakes in brokerages, which have skyrocketed in the past year on surging stock trade commissions generated by the stock market's heavy turnover.
Sponsor Results:
