China’s ‘King of IPO’ sentenced to 18 years in prison, three years after stock market rout
Former vice-chairman of stock market watchdog Yao Gang found of guilty of insider trading, taking US$10 million in bribes
The former vice-chairman of China’s securities regulator has been sentenced to 18 years in prison for taking bribes and insider trading, nearly three years after he was put under investigation in the aftermath of a stock market collapse.
Yao Gang was found guilty of taking 69 million yuan (US$10 million) in bribes and pocketing 2.1 million yuan from insider trading, the Handan Intermediate People’s Court in central Hebei province said in a statement on its website.
As well as the prison term Yao was fined 11 million yuan and all of his “illegal gains” were confiscated, the statement said.
Yao was removed from office in November 2015 having earlier being a central figure in Beijing’s efforts to bolster prices during a stock market rout in the summer of that year that wiped about US$5 trillion off the value of shares.
Yao spent about 22 years at the China Securities Regulatory Commission and during his 13 years in charge of approving initial public offering applications became known in the industry as “The King of IPO”. He was later promoted to the position of vice-chairman with responsibility for stock and futures markets.
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Yao’s downfall, like those of other senior financial regulators, including Yang Jiacai, the former assistant chairman of the China Banking Regulatory Commission, and Xiang Junbo, the ex-chairman of the China Insurance Regulatory Commission, was a result of President Xi Jinping’s efforts to curb corruption and risk in China’s financial sector.
In December 2016, Xi told senior officials at a meeting that the stock market rout of the previous summer was the fault of “big financial crocodiles” working hand in hand with state regulators.
Details of the meeting were made public a few months later, although Xi did not name any of the people he suspected of being involved.
The stock market collapse was seen as an embarrassment to Beijing and raised questions about the government’s ability to manage the nation’s financial markets.
Business magazine Caijing reported on its website in November 2015 that Yao had been investigated for possible links to Ling Jihua – a chief of staff to former President Hu Jintao – who was himself under investigation and sentenced to life imprisonment in July 2016 for corruption.
The article is no longer on Caijing’s website.
In a summary of the court’s verdict published by Xinhua on Friday there was no mention of Yao’s involvement with “crocodiles” or his links to Ling.
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It said that in his time as assistant chairman and then vice-chairman of the securities watchdog Yao had accepted bribes to ease share trading restrictions on several companies as they underwent mergers, acquisitions and restructuring.
He also used insider information to trade stocks through accounts under the names of other people, from which he earned 2.1 million yuan between January and April in 2007, the statement said.
Yao’s sentence reflected the fact that he had confessed to his crimes, expressed regret and given up his ill-gotten gains, it said.