Shares of China's second-biggest liquor maker Wuliangye Yibin Co plunged yesterday after it announced that the securities regulator is investigating it for suspected violation of the country's securities law.

The China Securities Regulatory Commission informed Wuliangye in a notice yesterday that it was suspected of breaking the securities law, according to a statement the liquor maker filed to the Shenzhen Stock Exchange yesterday.

The statement didn't give any details about the case. Calls by Shanghai Daily to Wuliangye's board secretary were not answered.

The firm, which didn't suspend trading of its shares after the announcement, fell 6.22 percent to close at 22.60 yuan (US$3.31).

The probe sparked speculation that Wuliangye may be involved in an unreported huge loss in stock investments.

Earlier media reports said that Wuliangye lost 55 million yuan in Asia Securities Co after it went bankrupt, but the liquor maker didn't mention the loss in its annual report. Wuliangye later denied that it invested in the brokerage but media reports cast doubt over the liquor maker's denial.

The CSRC recently tightened efforts to combat securities-related crimes by coordinating with the Shanghai and Shenzhen bourses following a new wave of irregularities as the key stock index jumped more than 80 percent this year.

The China Banking Regulatory Commission also vowed to supervise closely the use of new loans.

(Shanghai Daily September 10, 2009)