A number of leading Chinese securities firms are collectively facing a common issue, unique to 2015, in that their leading personnel have simply become unreachable and fallen off the grid amidst a series of probes.
Chinese companies, as well as financial markets have faced a tumultuous year in 2015, which has thus far included a cataclysmic stock market crash, growth headwinds, and widespread volatility.
Indeed, lingering concerns of liquidity droughts and a string of probes has done little to dampen the mood across Chinese markets in recent months. Earlier this week, the China Securities Regulatory Commission (CSRC) alleviated the shares required to engage in propriety trading, effectively lifting an order that required brokerages each day to buy more shares than they sell.
Despite this measure however, financial markets have still been bludgeoned with regulatory crackdowns in a bid to secure greater transparency for its domestic markets. This has led to multiple probes and investigation against two of China’s largest brokerage centers, among others.
Since September 2015, a total of thirty-four listed companies in Mainland China have had one or more senior executives disappear or face probes by the Chinese authorities, the country’s Securities Times Journal reported. Probes have ranged from routine inconsistencies to allegations of illicit behavior in one of the most widely fluctuating markets in the world.
On Monday, Guotai Junan International Holdings Ltd., a Hong-Kong listed company, became the latest Chinese-owned firm to lose contact with its senior executive, consequently instigating a staunch retreat in the share price – Guotai Junan Securities Co. is one of China’s largest securities firms.
In the meantime, the group appointed temporary replacements citing that they were unable to reach or contact their Chairman and Chief Executive Officer Yim Fung since last Wednesday, November 18, according to a Hong Kong stock exchange regulatory filing.
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Now You See Me, Now You Don’t
This is by no means an isolated case, with a number of other leading securities firms mysteriously losing contact with their senior leaders.
In addition, Lei Jie, a senior executive of Founder Securities Co and former Chairman of a joint venture with Credit Suisse Group AG, also seemingly fell into an abyss for several months, only recently surfacing after going into police custody and subsequently going missing in January.
Founder Securities said in January it couldn’t contact Lei after he asked for a week of sick leave. He was replaced as chairman and removed from the board.
This cycle has become almost commonplace in the country – back on September 25, an investigation was opened against Chinese brokerage Minzu Securities by Beijing’s securities regulator, after its Chief Executive Zhao Dajian mysteriously disappeared.
An initial analysis had suggested that Mr. Dajian was being detained, per a stock filing. However, Chinese state media reported that a probe into Minzu executives had been undertaken, after allegations of embezzlement estimated at in excess of $314 million (2 billion yuan) last year.
Several other firms as of late have also experienced the same sort of void at its executive position, including China Aircraft Leasing Group Holdings Ltd, China Minsheng Banking Corp, and Ningbo Zhongbai Co., among others,
It will be interesting to see if this string of disappearances ultimately yields any fines or prosecutions in China. With regulators focusing their attention on Chinese equity markets, seemingly desperate to preserve the market’s recovery off summer lows, its likely a probe or investigations will continue in a bid to foster greater market controls and transparency.