The new rules announced by the mainland's top prosecution office to crack down on securities fraud are setting the stage for exposing a series of commercial scandals, analysts and officials say.
'The government will be able to save face by slapping severe punitive actions on market manipulators,' said a Beijing-based source close to the China Securities Regulatory Commission. 'The new rules pave the way for more lawsuits against a group of unethical company bosses and fund managers.'
Directed mainly at cleaning up the stock market, the rules released on Monday by the Supreme People's Procuratorate and the Ministry of Public Security allow investors and creditors to take legal action against a wider range of financial crimes.
The prosecution office and the public security ministry had solicited the CSRC's opinion on several occasions to draft the rules, sources said.
A CSRC deputy department chief said yesterday that the watchdog hoped to stand firm against market irregularities but would use only legal resources to bring offenders in line.
Analysts said the new rules were aimed at appeasing disgruntled investors who got short-changed by big funds that played the markets using insider knowledge.
Analysts criticised the CSRC for putting up a harsh front without taking concrete steps to protect retail investors after it banned two fund managers - Tang Jian and Wang Limin - from the industry and fined each 500,000 yuan (HK$557,800) for insider trading.
