China’s securities regulator slaps fine on four people for making up, distributing fake news about short-selling
- The China Securities Regulatory Commission meted out combined fines of 560,000 yuan on four people, including the business news editor of a web portal
- Chen Yiheng, one of the four that were punished, was fined 200,000 yuan alone for fabricating false news on short selling that eventually moved stocks
China’s securities regulator has fined four people a combined 560,000 yuan (US$79,234) for fabricating and distributing fake news that caused declines on the stock market.
Chen Yiheng, 32, a native of southern Hunan province, was fined 200,000 yuan for fabricating information on January 28 about China’s new securities regulator putting short-selling on top of his 2019 policy agenda, according to the China Securities Regulatory Commission.
The other three people, including a business news editor working for China’s portal Sina.com, were fined 120,000 yuan each for spreading the news either on the website or through their Weibo accounts, the regulator said.
Short-selling, in which investors sell stocks at high prices before buying them back cheaper to pocket the difference as profit, is a curtailed activity in China’s capital market. Only half of the shares traded on the exchanges of Shanghai and Shenzhen are eligible for short-selling, in an extension of the plan starting this week.
Short selling is also far less active than leveraged buying. The outstanding balance of short selling was only 1.4 per cent of that of margin trading.
The fake news caused the Shanghai Composite Index to fall by as much as 1.4 per cent in intraday trading a day after it was distributed. The market did not recover from the loss until the CSRC issued a clarification that the regulator’s chairman Yi Huiman had never chaired a press conference on short-selling.