The largest price manipulation case in China, involving more than
5.4 billion yuan (US$653 million) of funds gathered from more than
100 companies and individuals was Tuesday heard by Beijing's No 2
Intermediate People's Court.
The Shenzhen China Venture Capital Co case, which is expected to
last three days, marks the country's first manipulation case
involving the price of stocks. The case is expected to bring about
new regulations for the stock market, according to Bao Lei, an
official with the court, Tuesday.
According to China's criminal law, manipulators of stock prices can
be sentenced up to five years in prison.
China
Securities Regulatory Commission is usually in charge of
dealing with inside trading scandals.
The two main suspects of the case -- Lu Jianxin (known as Lu Liang)
and Zhu Huanliang from Shenzhen China Venture Capital Co - have
absconded. The duo, along with Shanghai Huaya Co, allegedly raised
more than 5.4 billion yuan (US$653 million) between December 1998
and January 2001, -- under the names of different companies, from
over 100 financial institutions, companies, and individuals in 20
provinces and municipalities around the country.
The huge amount of money, according to the court, was then placed
into more than 1,500 stock accounts nationwide and used by the two
suspects to manipulate the price of shares of listed Shenzhen China
Venture Capital Co. The two suspects later gained huge profits by
manipulating the stock price.
The court yesterday sentenced two collaborators and representatives
from Shanghai Huaya Co but did not say whether the final verdict
would be announced after the three-day hearing.
China Securities Regulatory Commission launched a severe crackdown
on financial market corruption earlier this year by intensifying
the probe into price manipulation in the stock market.
The China Venture Capital Co case, after its exposure last year,
triggered panic amongst investors, which resulted in the company's
stock slumping by more than 10 percent in five days.
The handling of cases in the Chinese market by the China Securities
Regulatory Commission "is very opaque," compared with the openness
of the Enron case in the United States, said Hu Shuli, a famous
economist and managing editor of Caijing Magazine.
(China
Daily June 12, 2002)