The markets gave a muted reaction yesterday to news that securities regulators will crack down on unusual price movements and penalise companies involved. In a strongly worded statement on Wednesday, the Securities and Futures Commission (SFC) and the stock exchange warned that they would withhold approval for transactions and prevent the issue of derivative products by companies the subject of unusual trading patterns. The warning was seen to be directed partly at red-chip companies, many of whose shares have soared in the hope of receiving asset injections from their parents. Sources said the get-tough pledge did not appear to affect the market yesterday with some red chips, such as Beijing North Star, rising significantly. Brokers said the fact that market manipulation, being a criminal charge, was too difficult to prove meant that people believed the regulators would not take any strong action. SFC executive director Laura Cha yesterday reiterated that companies involved in unusual price movements would be penalised by not having transactions and new share placements approved. She said listed companies had an obligation to explain why their shares were moving sharply. 'Many company just made announcements and said they were not aware why the shares were going up. It is meaningless to the investors,' she said. 'The company should give a detailed announcement to explain recent business developments. The SFC will check those transactions and ask the company questions. 'If the company is unable to explain clearly the reason, then the company's shares should be suspended until it can explain the situation.' Shares suspended by the SFC recently and still suspended include Hansom Holdings, Chung Hwa Development Holdings and Linkful International Holdings. All three saw sharp price rises before they were suspended. Ms Cha said investors should be reminded that suspensions could be lengthy because investigations take time. She said regulators would watch for companies misleading regulators by saying no negotiations were going on when a transaction subsequently took place. Such transactions might not be approved. She said those involved in such cases would be remembered, and if they were involved in a new listing application, it could be held up. Last year, Giordano International issued an announcement that its former chairman Jimmy Lai Chee-ying would not place shares but several hours later the shares were placed overseas.