The China Securities Regulatory Commission (CSRC) has launched an investigation into some of China's largest brokerages for suspected rule violations.
According to a Bloomberg report, authorities are on the prowl for scapegoats following a more-than-40 percent plunge on the Shanghai Composite Index from its peak in mid-June.
“The authorities have been too involved in the stock market and now they’re trying to pass the responsibilities to others,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology. “In fact, they have to be responsible for the market crisis. It’s the authorities trying to act like a referee and a player at the same time.”
The brokerages under investigation are Haitong Securities, GF Securities, Huatai Securities, and Founder Securities for reportedly failing to review and verify client identifies as per "know-your-client" (KYC) requirements.
"The company will fully cooperate with the CSRC and strictly fulfil any obligations of information disclosure under regulatory requirements. So far, the business of the company is under normal operations," Huatai said in a statement. Similar remarks were made by the other three firms.
Separately, police are investigating people connected to the CSRC, Citic Securities Co. and Caijing magazine on suspicion of offenses including illegal securities trading and spreading false information.
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