Former Exchange Official Fined $72 Million for Stock Trading Violations
(Beijing) -- Feng Xiaoshu, a former official in charge of reviewing initial public offerings at the Shenzhen Stock Exchange, was fined 499 million yuan for trading stocks under his mother-in-law’s and sister-in-law’s names.
Feng, the former deputy director of the SZSE’s securities offering supervision department, bought shares in advance of companies’ IPOs using his relatives’ accounts and sold the shares after the start of trading, pocketing illicit profits of 248 million yuan ($36 million), said Zhang Xiaojun, a spokesman of the China Securities Regulatory Commission (CSRC), Friday in a news briefing.
Under China’s securities law, employees in regulatory bodies are not allowed to trade any shares or use another person’s account in such trading. A CSRC regulation issued in 2000 banned regulatory officials’ spouses and children from stock market trading.
Feng is the most recent financial market regulator to be caught up in an unfolding crackdown on financial market misconduct, which has brought down top insurance regulator Xiang Junbo and Yang Jiacai, assistant chairman of the banking regulatory body.
Feng was ordered to turn over all illicit gains and pay a fine of 251 million yuan, Zhang said. Feng also faces a lifetime ban from the securities market.
“Feng has violated the securities law and disturbed the order of the securities market,” Zhang said.
According to the CSRC website, Feng was a member of the IPO review committee under the CSRC between December 2004 and April 2007. In that role, he was involved in the review of more than 29 IPO applications, including those of China Merchants Energy Shipping Co., Shandong Luyang Share Co. and Baoxiniao Garment Group.
China has vowed for years to reform its review-based IPO system, which has been criticized for administrative intervention. The move toward a market-oriented, registration-based IPOs was regarded by the government as one of its major tasks in 2015. But the progress was stalled after a market crash that summer when the benchmark Shanghai Composite Index slumped 40% over two months.
Several securities officials have been brought down for IPO review-related misconduct, including Wang Xiaoshi, a former deputy chief of the CSRC’s public offering department, who was sentenced in 2015 to 13 years in prison for taking bribes.
Contact reporter Han Wei (firstname.lastname@example.org)