China cracks down on insider trading

Laws governing insider trading are being reviewed by Chinese authorities as the country attempts to curb illegal activity in its securities and futures markets.

Gui Minjie, vice chairman of the China Securities Regulatory Commission (CSRC), has told Xinhua, the country’s official news agency, that Chinese courts were looking to clarify the burden of proof and parameters for investigation of suspected insider trading.

This latest judicial interpretation, by the Supreme People’s Court, follows a June review of securities offences.

The crackdown on malpractice comes as authorities said new trends were emerging in the perpetration of such offences.

Yao Zengke, vice minister of the Ministry of Supervision (MOS), said the “scope of suspects” was expanding from executives of securities companies, to local government officials and executives of state-owned enterprises.

“It is necessary to build an institutional line of defence in order to wipe out the source of insider trading,” Yao said.

Last week a former local employee of China’s Southwest Securities was arrested for insider trading. According to the CSRC, from 2009 to 2011, Ji Minbo traded more than 40 stocks to make RMB20 million (US$3.2 million) using information not publicly disclosed.

Since 2004, the MOS said police had investigated 50 major insider trading cases and arrested more than 90 suspects, with more than RMB4.5 billion (US$713 million) involved. Gui said almost 60 other individuals in 31 cases had been given administrative punishments.