The China Securities Regulatory Commission has begun investigating a senior executive at Zhongken Agricultural Resource Development for alleged illegal stock trading, reflecting the mainland's efforts to bolster corporate governance amid rising trading activities in the market.
Huang Jinjian, party secretary of the Shanghai-listed crop seed production company, was being investigated over 'alleged illegal trading of the company's shares', a company statement on the Shanghai Stock Exchange's website said. No further details were given.
The commission was not available for comment. Market watchers called for the securities watchdog to do more to make its supervisory mechanism 'more complete, austere and effective'.
'What the CSRC has done is still far from enough,' said Guo Shiping, director of the International Finance Research Institute of Shenzhen University.
Still, Mr Guo described it as a 'good start' for the commission's investigators to focus on the senior executives of listed companies as their knowledge of the enterprises 'will make them more likely to be involved in misconduct such as insider trading'.
'They need to be watched over tightly,' said Mr Guo, adding that any misconduct by such high-ranking executives would 'result in unfair information allocation and greatly impact investors' confidence in the local market', especially when the mainland is becoming more integrated into the global market.
Zhongken's stock has a 5 per cent daily limit, compared with 10 per cent for most other listed firms, as it has not yet completed a conversion of state-owned shares as required by the regulator.
The shares declined 5.04 per cent to 7.54 yuan yesterday, after falling 5.02 per cent the previous day.
The Beijing-based company issued three statements to the Shanghai Stock Exchange last month claiming that it was not aware of the reason behind its shares' recent 'abnormal fluctuations'.
According to a report by the Shanghai Securities News, Mr Huang has traded Zhongken shares 'not in big amounts but frequently' in January and February last year.
According to Zhongken's interim report, Mr Huang owned as many as 7,000 Zhongken shares bought from the secondary market by June 30 last year.
The newspaper said that Mr Huang 'seemed not to have made any fortune' from the trades, 'but the possibility of insider trading cannot be ruled out'.
The report also said Mr Huang had been fined 30,000 yuan by the commission in July 2004 for violating securities laws.