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Monday, November 2, 2015, 12:16

Police bust major futures manipulation case

By Xinhua

SHANGHAI - Police have netted three suspects and is seeking to arrest more overseas for pocketing huge funds via manipulating futures trades, the Ministry of Public Security announced Sunday in a statement.

Authorities locked onto "Yishidun," a foreign trade company founded in 2012 in east China's Jiangsu Province, in July when looking into fluctuations in the country's securities and futures markets that led to huge losses for many investors.

Yishidun, a company jointly invested by two Hong Kong-based firms set up by foreign nationals Georgy Zarya and Anton Murashov, was founded in 2012.

According to Gao Yan, general manager of the company and one of the arrested, the company used a software developed by a foreign technical team to automatically buy and sell in huge quantities in prices far deviated from market standards and illegally pocketed more than two billion yuan (US$316 million) with this method.

Citing investigation results, the statement said that the accounts used by the company traded so fast that as many as 31 futures contracts were purchased in one second in June and July when the market experienced severe fluctuations.

In another development, Xu Xiang, general manager of the Shanghai-based company Zexi Investment, is under investigation for suspected inside trading, the Ministry of Public Security announced late Sunday.

Xu and several others allegedly obtained inside stocks information via illegal methods and participated in insider trading and manipulating stocks prices, a ministry statement said.

The suspects have been placed under coercive measures, which include summons by force, bail, residential surveillance, detention and arrest.

The slide in stocks since June has prompted regulators to restrict automated trading in commodities futures and tighten other rules which have winded the futures market.

Chinese regulators have asked foreign and Chinese-owned brokerages in Hong Kong and Singapore to hand over stock trading records, while some local fund managers have been called in and asked to explain trading strategies every two weeks.

This comes as lock-up shares worth nearly 31.5 billion yuan (about US$5.14 billion) will become eligible for trade on China's stock market next week.

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