China’s securities regulator in investigating Citic Securities Co. for suspected violations of securities rules.
The action puts the country’s largest stock broker at the center of a widening campaign to clean up the financial sector after a stock market rout this past summer, the Wall Street Journal reports.
It comes two days after the quasi-regulatory Securities Association of China said Citic Securities overstated its swap transactions numbers between April and September.
The company blamed computer-system upgrades as the reason for inaccurate reporting and corrected the figure.
It reported doing swap deals of 1.06 trillion yuan (US$166.4 billion) between April and September when the actual figure was closer to 40 billion yuan.
In a filing to the Shanghai Stock Exchange, Citic Securities said it has received notification from the China Securities Regulatory Commission regarding the investigation but gave no further details.
The Beijing-based brokerage said it will cooperate with the authorities and that the firm’s operations remain normal.
The move by the Chinese authorities marks a significant shift in the nature of its probe into the brokerage, which has been at the forefront of Beijing’s effort to modernize its underdeveloped capital market and globalize the reach of its state-owned financial behemoths over the past decades.
Guosen Securities, China’s third largest broker by assets, also said on Thursday that it received investigation notification from the CSRC over suspected violation of securities rules, according to the company’s filing to the Shanghai Stock Exchange.
No details were provided regarding the probe.
Since August, several senior employees at Citic Securities, including general manager Cheng Boming, have been detained by the Chinese police over suspected illegal practices, such as insider trading.
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