Rare leniency by Chinese security watchdog saved three brokers US$60 million
- Regulator announces no case to answer after three-year probe and drops fines of US$60 million
- The companies had been caught up in crackdown that followed the market crash
The Chinese security market watchdog has made a rare U-turn and reversed its decision to fine three major security firms a total of 414.55 million yuan (about US$59.9 million) for allegedly assisting “malicious short selling” during the 2015 stock market meltdown.
Citic Securities, Haitong Securities and Guosen Securities，announced on Monday night they had been informed by the China Securities Regulatory Commission (CSRC) that the alleged wrongdoing could not be established and the authority had decided to close their cases.
The decision to throw out the charges after an investigation lasting more than three years spared the companies having to pay the fines set by the watchdog in 2015, according to a report by Thepaper.cn.
The three brokers had been accused by the regulator of providing margin financing and securities lending for Citadel Shanghai Trading, which used those facilities to short-sell China stocks during the 2015 rout, dubbed the biggest reversal in decades by some market watchers.
One of the biggest sell-offs in Chinese stock market history was triggered on June 12 of that year. Overleveraged A-shares on the Shanghai Stock Exchange lost one third of their market capitalisation within a month and by early July more than half of Shanghai stock market’s listed companies had filed to halt trading in a desperate attempt to prevent further drops.