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Unlisted firms come under scrutiny

(China Daily)
Updated: 2007-03-22 10:07

China will step up oversight of unlisted firms this year, with more legislation imminent.

The aim is to combat illegal securities dealings and thus shield investor interests, the nation's stock regulator said yesterday.

The watchdog will work with other state agencies to beef up stock-market development and "actively study a plan to put supervision over non-listed companies under the legal system," it said in a Website statement.

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China's State Council last month approved the establishment of a joint task force among seven government departments to crack down on mounting illegal securities activities.

The team, led by theChina Securities Regulatory Commission, will take charge of drafting rules, educating investors and coordinating work among different provinces and municipalities.

"The year 2007 will be a vital year for the campaign to clamp down on illegal stock activities," the commission said in the statement.

"We should create a tough stance towards stock-related crimes."

Elderly victims

The governments in the municipalities ofBeijing,ShanghaiandChongqingand in the provinces ofGuangdongandHebeihave already set up special workforces to battle stock crimes, the statement said.

China's yuan equities have more than doubled in value since early 2006, stoking investor enthusiasm over stock purchases - but also sparking incidents of securities-related fraud.

Many investors have been tricked into buying "original shares" of firms which pledge hefty returns on the back of future public listings.

Most of these companies did not have proposals to issue shares publicly.

Such stock criminals, who often prey on retired and laid-off workers with little knowledge about securities, could spur social unrest and should be nipped in the bud, the State Council said earlier.

The task force will endeavor to crack down on "a batch of cases which involve large amounts of money," yesterday's statement said.

China defines any public stock sale involving 200 investors as illegal if it fails to gain the regulatory green light.

A financial institution is not allowed to be anunderwriterunless it wins licenses from the stock watchdog.