Rat Trading

Rat trading is a type of insider trading in which investment fund managers illicitly use private information, accessed often through their company, for personal gain. Rat traders use this confidential information profitably by trading through secret "rat accounts" controlled by the manager for relatives and friends. Sometimes a rat trader will first use client money to influence share prices in order to benefit the investments made with personal funds. In February 2009, the Standing Committee of the National People's Congress passed a revision to the Criminal Act, elevating rat trading to a criminal offense punishable by up to 10 years of imprisonment. The China Securities Regulatory Commission has been cooperating with stock exchanges and using big data technologies to comb through huge amounts of trading data to catch rat traders.

In the News

Deng Ruixiang, a member of a 12-person committee under the China Securities Regulatory Commission, which examines and approves companies' requests for initial public offerings, has been dismissed and placed under investigation for alleged involvement in rat trading, the securities regulator said on September 19.