China’s former securities regulator Liu Shiyu is probed over family members’ alleged insider trading and favouring hometown IPOs, sources say
- Family members were able to buy bonds at below-market prices, source says
- Six rural commercial banks from Liu’s hometown in Jiangsu province went public during his tenure, drawing scrutiny, source says
Liu Shiyu, China’s former securities regulator, is being investigated for allegedly fast-tracking initial public offerings (IPOs) of small banks in his hometown and also of having family members who bought bonds at below-market prices, according to sources and media reports.
The investigation of Liu, announced Sunday in a vaguely worded statement that said he had “turned himself in” and was “collaborating with investigations”, shocked industry insiders and regulators in China’s financial market.
The investigation marks the highest-ranking official in China’s stockbroking industry to take the fall, only four months after he stepped down as chairman of China Securities Regulatory Commission (CSRC) to head the All-China Federation of Supply and Marketing Cooperatives, a Soviet-era holdover of China’s centrally planned economy that operates a network of 30,000 agricultural collectives.
A picture of what might have brought about Liu’s fall is beginning to appear.
It is partly tied to a network of banks in his hometown of Guanyun county in Jiangsu province, according to several financial industry sources, and a report by Chinese financial media outlet Caijing. Before CSRC, Liu spent most of his career in the banking system, including acting as chairman of the Agricultural Bank of China and as a deputy governor of the People’s Bank of China (PBOC).