Manipulation sees Guotai Junan banned from acting as market maker for mainland China’s new third board for three months
Brokerage quoted prices for 16 stocks that were substantially different from the market prices
Guotai Junan Securities will be banned from acting as a market maker for mainland China’s over-the-counter market for three months from Monday for manipulating the shares of 16 companies listed on the board in December, the market operator announced at the weekend.
The penalty for the mainland’s third-largest brokerage by assets follows the appointment of new China Securities Regulatory Commission chairman Liu Shiyu, who said in his first speech to staff at the regulator last week that cracking down on manipulation was one of his priorities.
The OTC market is official named the National Equities Exchange and Quotations but is more commonly known as the new third board. It has 5,800 listed companies and is mainly an electronic trading platform for technology and new start-ups firms which do not have the profit record needed to raise funds publicly.
The market is not open to all brokers and investors, with only certain mainland brokers allowed to act as market makers to match prices between selected investors with more than 5 million yuan (HK$5.95 million) in their securities accounts.
This trading of Guotai Junan seriously affected the orderly trading of many stocks
The new third board said on its website on Saturday that the CSRC had decided to ban Guotai Junan from acting as a market maker from February 29 to May 29.
The penalty was handed down after a CSRC investigation found Guotai Junan had quoted prices for 16 stocks listed on the new third board on December 31 at price levels which were substantially different from the market prices.