Mainland regulators have ordered China Cinda Asset Management Corp to take over troubled Liaoning Securities, amid a growing trend of government-led rescues to clean up the brokerage industry.
Liaoning Securities is the second brokerage in a week to be bailed out, as the authorities try to appease angry investors and lift the loss-ridden sector out of disarray.
An announcement published in the Shanghai Securities News yesterday said the takeover took effect on October 22 under an agreement between the People's Bank of China, the China Securities Regulatory Commission and the Liaoning provincial government.
It said Liaoning Securities had run into unspecified 'operational irregularities' and that during the takeover, Cinda would manage the brokerage's operations.
However, debt payments would cease except to customers with trading accounts. The small brokerage said on its website it had underwritten 2.5 billion yuan in corporate bonds and 1.5 billion yuan in government bonds as of May.
Analysts said Liaoning Securities' troubles were similar to those at collapsed rivals such as Minfa Securities and China Securities.
These included the misappropriation of client funds for stock speculation and general mismanagement of assets.
