China's?stock regulator has launched a probe into suspected
insider trading involving Hangxiao Steel Structure Co, whose shares
jumped by the daily limit for six consecutive sessions before the
disclosure of a huge contract.
The investigation, coming at a time when authorities have
pledged to crack down on stock-related crimes, may herald a
wide-ranging campaign against insider trading, industry sources
said.
Shanghai-listed Hangxiao Steel said on March 13 that it had won
a 34.4 billion yuan (US$4.45 billion) contract to sell construction
products and services for public housing projects in Angola.
The statement, which was made after the firm's shares soared by
the 10 percent ceiling for six days, buoyed the stock for another
four days before it was suspended from trading on March 16.
Industry insiders and media reports raised skepticism that the
company could win such a large contract and questioned why its
shares soared before the news was made public.
Hangxiao Steel has said that the contract was signed with China
International Fund Ltd, a Hong Kong-based firm involved in
construction activities in Africa.
It includes 24.8 billion yuan in construction-product sales and
9.6 billion yuan in fees for construction services.
Sources close to the watchdog said yesterday that the stock
regulator and its branch in the Zhejiang Province, where Hangxiao
Steel is based, have begun investigations into the firm about
possible irregularities.
An official at the China Securities Regulatory Commission
confirmed the investigation yesterday, declining to comment
further. Officials at Hangxiao Steel and China International Fund
were not available for comment.
The regulator is collecting evidence and plans to transfer
anyone involved in illegal securities activities to the
prosecutors," said a Shanghai-based source close to the
watchdog.
The State Council last month approved the establishment of a
joint task force among seven government departments to crack down
on illegal securities activities.
Another firm that has been targeted for investigation for
alleged insider trading is GF Securities Co, which in September
proposed to buy control of Shenzhen-listed Yan Bian Highway
Construction Co for a back-door listing, Caijing Magazine
said on Wednesday.
The deal hasn't been approved because the regulator suspected
some managers at GF illegally profited by buying Yan Bian shares
before the transaction was made public, the magazine said.
(Shanghai Daily March 23, 2007)