China regulator to punish five fund firms in insider-trading cases
BEIJING (Reuters) - China's securities regulator said on Friday it will punish five fund management companies for faulty internal controls that led to insider trading, another move in a Beijing's widening crackdown on Chinese brokerages and fund managers.
The China Securities Regulatory Commission (CSRC) named only two of the five: China Asset Management Co Ltd and HFT Investment Management Co Ltd, a joint venture between Haitong Securities Co. Ltd <600837.SS> and BNP Paribas Investment Partners BE Holding.
Individuals responsible for the insider trading have already been turned over to the police for investigation, the CSRC said previously.
A China Asset Management employee told Reuters, when contacted by telephone, "We attach great importance to the regulatory measures and are actively implementing corrective measures to our control systems in accordance with the requirements."
HFT declined to comment.
The regulator said the five companies will be suspended from issuing new mutual fund products for three to six months.
Earlier this month, China meted out similar punishments to the country's three largest brokerages for allegedly violating regulations governing the issuance of margin trading accounts.
This week, the regulator launched a fresh investigation into other brokerages, people with direct knowledge of the matter told Reuters.
It has also intensified investigations into share sales by corporate insiders during valuation spikes.
At issue are concerns that China's stock rally - one of the few bright spots in its financial markets in recent months - could be exploited by unscrupulous insider trading and distorted by excessive use of leverage, which would amplify damage if markets crash.
The CSRC has also warned six other companies to adjust their behaviour, without punishing them, the regulator said.
Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission, made the announcement at a weekly news conference.
(Reporting by Zhang Xiaochong and Pete Sweeney in SHANGHAI; Writing by Kazunori Takada; Editing by John Ruwitch and Richard Borsuk)
