The China Securities Regulatory Commission (CSRC) said yesterday
a fund manager at a Shanghai-based joint venture fund management
firm has been found guilty of insider trading.
The crackdown on illegal trading comes as the nation's
securities regulator tries to cool the equity market.
An initial investigation by the CSRC found Tang Jian, a fund
manager of China International Fund Management (CIFM) made use of
undisclosed information to buy stocks through his family's
In an announcement yesterday, CIFM said it had dismissed Tang
for profiting from insider trading.
CIFM said it has been informed by CSRC it will launch a formal
investigation into Tang's dealings. The CSRC is not previously
known to have taken any direct action against insider traders.
The investigation comes a few weeks after the Shanghai Stock
Exchange suspended two individual investors accounts for alleged
The involvement of CSRC in the Tang's case shows that the
authorities are stepping up efforts in clamping down on such market
The CSRC issued a statement last Friday that the government will
pay close attention to illegal profit-making and price rigging
The CSRC again warned investors about the risks stock markets
posed and vowed to crackdown on insider trading and "rat trading"
by fund management companies.
"Rat trading" occurs when a broker receives an order from a
client to buy a share at a certain price. If the broker believes
the share will drop, he may be tempted to wait and buy the stock at
a lower price through his own account. He then sells the stock to
the client at the client's original price and pockets the
Tang was reported to have bought the stock of Xinjiang Joinworld
Co Ltd through his family's accounts before buying it for his
managed fund, China Growth. He was reported to have earned 1.5
million yuan from the trade.
Following a newspaper report of Tang's possible insider trading,
the company released a statement last month that it had not been
investigated by the government watchdog, but would keep a close eye
on the case.
"CIFM and the Shanghai Stock Exchange had warned Tang for his
short-term and frequent stock trading many times last year," the
company's chief executive, Mandy Wang, said.
CIFM said the dismissal of Tang "will not affect the company's
"We will strengthen supervision and improve business management
to prevent a similar case happening," Wang said.
CIFM has about 40 billion yuan (US$5.15 billion) under
The company is jointly owned by Shanghai International Trust and
Investment Co Ltd with a 51 percent stake and JPMorgan Asset
Management (UK) Ltd with 49 percent. The China Growth Fund, set up
in September last year, has posted a total return of 102.14 percent
up to now.
(China Daily May 17, 2007)