Financial Markets: Three Chines brokerages are under investigation
BEIJING >> Three of China's biggest securities firms are under investigation in a fresh aftershock from this summer's market plunge.
Shares in Citic Securities Ltd. and Guosen Securities Ltd. fell Friday by the 10 percent daily limit after both said they were being probed by regulators. A third brokerage, Haitong Securities Ltd., issued a similar announcement after trading in its shares was suspended Friday morning. None gave details.
The Shanghai Composite Index closed down 5.5 percent.
Authorities have detained securities executives, an investment fund manager, government employees and a reporter for a business magazine following the collapse in prices that began in early June. The announcements that brokerages themselves were under investigation represented a further widening of the probes.
The investigations were seen by many as an attempt by the ruling Communist Party to deflect blame for the 30 percent fall by the Shanghai index after state media encouraged the public to buy stocks.
Citic is China's biggest brokerage and part of Citic Group, the Cabinet's main holding company. Guosen and Haitong are among the country's 10 biggest securities firms.
In September, the police ministry announced Citic executives including its general manager, Cheng Boming, were suspected of insider trading and leaking sensitive information. The previous month, the official Xinhua News Agency said eight Citic employees and one current and one former employee of the market regulator were suspected of illegal stock trading.
A star Chinese fund manager, Xu Xiang, was detained Nov. 2 on suspicion of insider trading, according to Xinhua.
The market benchmark soared more than 150 percent beginning late last year before hitting a peak June 12 and plunging.
The downturn triggered complaints politically favored insiders profited at the expense of small investors. Beijing responded by barring large shareholders from selling and ordering executives to buy back any recently sold stock in their own companies.
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