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Citic Securities said on Sunday that it was “proactively cooperating” with authorities. Photo: Finance Asia

Journalist, market regulatory official confess to roles in alleged insider trading at Citic Securities

A Chinese financial journalist and a stock market regulatory official implicated in a probe into suspected insider trading at Citic Securities confessed on state television on Monday morning.

Their appearance came hours after a midnight announcement that both men and four executives of the brokerage, including managing director Xu Gang, were being formally held.

The six people, plus another four Citic Securities executives and a former staff of the China Securities Regulatory Commission (CSRC), the market watchdog, were “assisting police in their investigation” into a suspected insider trading case last week.

Xu and three others, including executive committee member Liu Wei, head of the company’s securities financing business Fang Qingli and company director Chen Rongjie, had been criminally detained for suspected insider trading, Xinhua reported.

Under Chinese law, “criminal detention” precedes a formal arrest.

Incumbent CSRC official Liu Shufan was being held for suspected insider trading, counterfeiting government official stamps and taking bribes, Xinhua said.

In an article published on July 20 – soon after the government unleashed hundreds of billions of yuan to rescue the beleaguered market – Wang wrote that the CSRC was preparing an exit plan. The regulator denied the story.

“I obtained the information through the abnormal channel of gleaning, in private, information about the market,” said Wang, in a green collared shirt and his face un-blurred in a CCTV news session. “I then wrote the story based on my subjective speculation.”

It is unclear if Wang and Liu were accompanied by their lawyers at the time of the interviews.

“I should not have published a report that caused such a significant and negative impact on the market at such a sensitive time,” Wang said in front of the camera. “I regret my behaviour. I’m willing to confess my crime.”

Liu confessed to trading on inside information in the same news footage. He was accused of taking bribes from a listed company in return for securing approvals from the regulator.

Liu also allegedly used 10 million yuan (HK$12 million) in funds borrowed from a friend to buy shares in the company via others’ accounts. The transaction generated a 3 million yuan return, of which Liu pocketed 1 million yuan.

Liu also used inside information about the company to make several million yuan in illicit gains.

Citic Securities said in a statement on Sunday that it was “proactively cooperating” with authorities and had taken steps to scrutinise and correct its various businesses, “especially ‘innovative’ ones”.

It did not elaborate further on what businesses it was referring to.

 

 

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