China vows strong penalties for illegal financing activities
Crackdown to focus on underground banks and stock market manipulation
China will severely punish anyone involved in illegal financing activities, especially targeting underground banks and the stock market, after a series of scandals, state news agency Xinhua reported on Sunday, citing the state prosecutor.
“Conscientiously follow the demands of the central government, [and] put the prevention of financial risk in an even more important position,” Xinhua said.
“Severely punish the illegal collection of public deposits, fraudulent fundraising and other economic crimes involving the public, as well as money-laundering, underground banks and online pyramid selling,” it added.
Prosecutors would also step up a crackdown on securities crime, such as market manipulation, insider trading and fake information releases, and crime in the real estate market such as tax avoidance, Xinhua said.
The report did not specify what punishments might be meted out as part of the crackdown.
The article referenced several recent scandals, including China’s biggest alleged online fraud – a nearly 60 billion yuan (US$8.73 billion) case involving online peer-to-peer lender Ezubao – and last month’s jailing of a Chinese hedge fund manager detained in the wake of China’s 2015 stock market crash.
The hedge fund manager, Xu Xiang, was jailed for 5 ½ years last month in a court in Shandong for stock market manipulation.
Xu was arrested in April last year for insider trading and market manipulation. He was detained in late 2015, just after a stock market rescue scandal brought down senior regulators and executives in state-owned brokerage companies.
The court found that Xu conspired with the senior management of 13 listed companies to take advantage of inside information to manipulate stock prices and turnover and reap huge profits between 2010 and 2015. The illicit gains made by Xu were recovered, but the amount was not revealed.
Xu made headlines on November 1, 2015, when a photo of him handcuffed and wearing a white Armani suit went viral on social media. Official state media later confirmed he had been detained in Ningbo, his hometown.