Three people were detained for their alleged roles in an insider trading scam in shares of a listed construction company, the latest move by the authorities to clamp down on insider trading and other irregularities in the stock market.
Three people, including Luo Gaofeng, a securities representative from East China's Zhejiang-based Hangxiao Steel, were arrested on Monday, the Xinhua News Agency reported, citing the China Securities Regulatory Commission (CSRC), the country's top securities market watchdog.
The other two were not employees of the construction company, which is listed on the Shanghai Stock Exchange.
One of those detained is a former employee of the company.
The case is still under investigation, Xinhua quoted an unidentified CSRC official as saying.
"Strengthening the crackdown on irregularities in the stock market and severely punishing the culprits are major tasks of the regulator," Xinhua quoted another CSRC official as saying.
The arrests in the Hangxiao case, the official said, demonstrate the crackdown on stock market manipulation is being stepped up.
The securities regulator fined Hangxiao 400,000 yuan, its chairman Shan Yinmu and president Zhou Jinfa 200,000 yuan each, and three other officials 100,000 each last month for failing to abide by the information disclosure rules, the first such case since the listed company information release management rule took effect on January 30.
Hangxiao Steel, a previously unknown construction company, shot to stock market stardom after its shares leaped in the first half of this year, pushed up by a multibillion yuan contract the company said it won in Angola. Its shares surged by the daily limit of 10 percent for 10 straight days ending on March 16.
Hangxiao announced on March 13 that it had won a contract in Angola, a construction and engineering project on public housing worth 34.4 billion yuan.
Its shares were then suspended from trading for 10 days beginning on March 19, after the company was accused of violating the information disclosure rules and manipulating stock prices.
"The company failed to disclose orders from Angola in the media or tell investors about the transaction in due time," Hangxiao Steel said on May 14.
Trading in Hangxiao Steel shares was halted yesterday. They dropped 4.94 percent on Wednesday, closing at 28.30 yuan.
(China Daily June 15, 2007)