China’s securities regulator has levied one of its largest ever fines for market manipulation, in a sign of increased enforcement efforts by authorities.
The China Securities Regulatory Commission fined Tang Hanbo and associates Rmb1.2bn ($174m) for manipulation of several mainland-listed stocks, a figure that includes penalties as well as disgorgement of illegal profits, the CSRC said on its website. The agency’s latest action follows its Rmb3.5bn fine of Xian Yan last month for market manipulation stemming from false information disclosures.
The punishment of Mr Xian appears to be the largest administrative fine ever, according to an FT examination of public disclosures and media reports. The cases of Mr Tang and Mr Xian alone already make 2017 a record year for CSRC fines, the third straight such record. The CSRC levied Rmb4.3bn in fines in 2016, up 2.9 times from the previous year’s record total.
In January, a court sentenced prominent hedge fund manager Xu Xiang to more than five years in prison for market manipulation. The court did not publicly announce a fine, but local media said Mr Xu — who ranked as China’s 188th richest man in 2015 with an estimated wealth of $14bn — would be forced to pay Rmb11bn.
In one instance of manipulation, Mr Tang used three separate Hong Kong accounts, as well as one on the mainland, to conduct trades through the Shanghai-Hong Kong stock connect, a scheme launched in late 2014 and which provides foreign investors unprecedented access to mainland shares.
Mr Tang’s use of Hong Kong accounts was apparently intended to disguise his activity. Mainland regulators and stock exchanges maintain a system for identifying traders in real time, whereas Hong Kong’s Securities and Futures Commission must request investors’ identities from brokers after the fact.
CSRC said it co-operated with the SFC to uncover the manipulation by Mr Tang, marking the first case of manipulation uncovered through the programme. When Hong Kong and mainland authorities launched a new trading link, the Shenzhen-Hong Kong stock connect in December they also concluded an agreement to increase information sharing.