By launching a probe into possible insider trading at Citic Securities, China’s biggest and most prestigious brokerage, President Xi Jinping’s government has signalled the financial services industry is fair game for its anti-corruption drive after a stock market bust wiped out $5 trillion in market value.
Bloomberg News reports that police questioning of Citic Securities’ executives in recent weeks has spread to a regulatory probe of activities by the firm’s president, Cheng Boming, and two other senior executives. It’s a rare move by the industry watchdog that’s not known for aggressively cracking down on illegal trading practices.
'This has parallels with the anti-corruption drive', said Fraser Howie, co-author of “Red Capitalism” by telephone from New York. 'They are trying to show they are serious about clamping down in the marketplace and that no one is safe'.
Citic Securities is 'the Goldman Sachs of China', according to a Paul Schulte, a former executive with China Construction Bank, who helped take the company public in 2003.
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