Watchdog revises insider trading regulations

Huang Yixuan
China Securities Regulatory Commission announces changes to registration system of insider information of listed companies as it strengthens moves to uphold market order.
Huang Yixuan

China's securities regulator has revised the policies on the registration system of insider information of listed companies.

Gao Li, a spokeswoman for the China Securities Regulatory Commission, said the amendments to regulations include: to implement the provisions of the New Securities Law; to reiterate the main responsibility of listed companies in preventing insider trading; to strengthen the duty of stock exchanges in preventing and controlling insider trading; and to clarify the obligations of intermediary institutions to cooperate.

Gao said the commission will constantly improve the mechanism to crack down on insider trading and uphold market order.

Gao also outlined the handling of cases in 2020, pointing out that major financial fraud cases were systematic and of large scale.

A total of 84 new cases of information disclosure were filed during the year, of which 33 were on financial fraud with the number of cases basically the same as 2019. 

The scope of the crime has extended. In addition to the processes including traditional IPOs, continuous information disclosure, and mergers and acquisitions, financial fraud also appeared in fields such as issuance of bonds and NEEQ (National Equities Exchange and Quotations) Select.

Financial fraud sometimes also intertwined with other violations such as occupation of funds and illegal guarantee. As an example, some major shareholders illegally transferred the funds of listed companies to individual accounts in the name of foreign investment which then flowed back to the listed companies as investment income so as to inflate profits.

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