Southern Securities' former heads arrested

SHENZHEN: Three former presidents of the bankrupt China Southern Securities, once the country's fifth-largest broker, were arrested earlier this month for allegedly manoeuvring stock trading prices, according to Xinhua News Agency.

Kan Zhidong, dubbed "a patriarch of China's securities industry," who was appointed president in June 2002 in order to bring the security house out of a financial crisis, was taken away by Shenzhen police in Shanghai last Thursday, the report said.

Another two ex-presidents, Liu Bo and Guo Yuanxian, predecessors of Kan, were said to have been arrested on the previous day.

Publicity officials of the Shenzhen Public Security Bureau, after consulting with the department that is handling the case, told China Daily that it could make no comment.

According to legal procedures, the suspects can be held in custody for no more than 30 days before the procuratorate issues a formal warrant for arrest and brings them to court.

A senior official of the Shenzhen Securities Industry Association, who asked to remain anonymous, said it was too early to make any comment on the case as it was the subject of legal proceedings.

"A court will rule whether they have committed a crime or not. But the case shows the country's determination to regulate the securities companies. It's a positive sign for the whole industry," the official said.

He explained that speculation activities, including firms' practices to manoeuvre stock prices, more frequently occurred in the early stages of the stock market, but have been curbed over recent years with the maturity of the market and investors, as well as the improvement of the legal environment.

The suspects could be jailed for up to 5 years if found guilty, according to legal experts.

The Shenzhen-based China Southern Securities, which allegedly had a debt of more than 10 billion yuan (US$1.2 billion), was taken over by the market watchdog China Securities Regulatory Commission and the local government at the beginning of 2004, and its closure was announced last April.

Source: China Daily