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Police Probe Alleged Rat Trading at ICBC-Credit Suisse China JV

By Yue Yue and Leng Cheng
From 2012 to 2015, a former senior executive at ICBC Credit Suisse Asset Management Co. traded 104 stocks through accounts owned by his father and father-in-law, official media reported Saturday. Photo: Visual China
From 2012 to 2015, a former senior executive at ICBC Credit Suisse Asset Management Co. traded 104 stocks through accounts owned by his father and father-in-law, official media reported Saturday. Photo: Visual China

(Beijing) — Chinese police said they are investigating a “rat-trading” allegation at a fund-management company jointly owned by Industrial & Commercial Bank of China and Credit Suisse Group, as the country continues cracking down on financial misdeeds.

In China, rat trading refers to a practice of broker trading equities based on information that will never go public, such as pending orders from brokerage firms or their clients.

The Ministry of Public Security said in a statement Friday that police had completed a preliminary investigation into a former senior executive at ICBC Credit Suisse Asset Management Co. The executive, surnamed Hu, was already in the hands of prosecutors, the ministry said, without elaboration.

From 2012 to 2015, Hu traded 104 stocks through accounts owned by his father and father-in-law, state-backed broadcaster China Central Television (CCTV) reported Saturday, citing several sources from the China Securities Regulatory Commission (CSRC).

Sources told Caixin that the executive is Hu Tuofu, former deputy director of ICBC Credit Suisse’s trading department. Hu couldn’t be reached for comment.

ICBC Credit Suisse said Friday that Hu left the company in 2015 for “personal reasons,” and the company was not aware of Hu’s condition after his resignation.

The CSRC couldn’t be immediately reached for comment.

This investigation comes as the CSRC steps up efforts to combat financial misdeeds. Since 2014, the regulator has initiated 99 rat-trading investigations, leading to convictions of 25 fund managers and causing 15 others to be banned from the industry. By comparison, the CSRC launched 59 rat-trading investigations from 1993 to 2013.

Contact reporter Leng Cheng (chengleng@caixin.com)

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