China's securities watchdog on Friday expanded its market-entry
ban on securities market rule-violators, its latest measure to
improve the market.
In what experts described as a "long overdue" step, the China
Securities Regulatory Commission (CSRC) said that senior management
and controlling shareholders of listed companies and securities
firms may face expulsion from the securities market if they breach
the rules, the first time they have been included in the ban.
"It's a long overdue step," said Wang Lianzhou, a retired
securities law professor.
"The controlling shareholders of those listed companies are
often the masterminds and manipulators of the market through their
listed units," he said.
"They should have been targeted before," Wang said.
The professor said the new regulation, to take effect on July
10, would at least put in place an effective deterrent to "these
types of potential wrong-doers" in the securities market.
The new rules also apply to the senior management of listed
companies and securities firms and to senior security fund managers
as covered in the existing draft rules enacted in 1997.
Professionals in the securities service sector will also face
the market-entry ban penalty if they violate the rules, according
to the new regulation.
Under the new rules, offenders may face varying penalties
depending on the severity of their acts.
Anyone who commits criminal acts or breaches that "seriously
disrupt securities market order and lead to severe social
consequences" or cause "very significant" losses to investors will
be permanently expelled from the securities market, the securities
regulator said.
Anyone who is found to have masterminded or implemented any
"major" activities violating the laws or administrative regulations
or securities regulator's rules may also face a lifetime
market-entry ban to the securities market, according to the new
rules.
Friday's move is the latest step taken by the top securities
regulator to improve the stock market, which is rebounding from a
five-year-long slump since the beginning of this year.
On May 29, the securities regulator ordered controlling
shareholders of listed companies to return funds misappropriated
from their listed units by the end of the year, a common problem in
China's stock market.
A total of 33.6 billion yuan (US$4.2 billion) of misappropriated
funds in 189 publicly traded companies were still in the hands of
shareholders on June 1, according to figures released by the
Shanghai Stock Exchange and the Shenzhen Stock Exchange, the
country's two bourses.
(China Daily June 10, 2006)