It seems China’s top investment bank lost its Chairman after some of his senior executives were involved in insider trading which he failed to prevent, according to a report in the FT.
Citic Securities announced last week that Wang Dongming was retiring “in consideration of his age”, but it appears to be linked to a recent operation that saw police arrest “at least seven senior Citic Securities executives, including its general manager, over alleged insider trading”, the FT reports.
The decision to force Wang into retirement was made by senior Chinese government officials and delivered by Citic group chairman Chang Zhenming.
Citic Securities was central to Chinese authorities’ rescue mission after the Shanghai stock market bubble burst earlier this year. But the police became involved after allegations that Citic executives were front-running its purchases intended to prop up stock prices with purchases on their own accounts.
Wang appears to have escaped sanction, however, with the FT reporting that another Citic group executive said that “given his age he (Wang) was allowed to save face”.
Ominously for Chinese finance and anyone else who may have thought a little front-running could go unnoticed in the maelstrom of the Chinese stock market bubble and rescue is the comment from the same executive: “The earthquakes in the financial sector are just beginning.”
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