China regulator to punish fund managers for insider trading

The mainland's securities regulator will punish four fund-management firms for insider trading, sources said.

China Asset Management, the third-largest fund manager in the country, would be banned from issuing new products for six months, while Harvest Fund Management, China Universal Asset Management and HFT Investment Management would be barred for three months, they said.

The companies would be penalised because their employees were found to have been front running, the sources said. The firms lacked proper controls to prevent such behaviour by employees.

Front running refers to the practice of profiting from prior knowledge about a transaction expected to influence prices.

The mainland is cracking down on insider trading as it seeks to lure foreign investors to the stock market, which became the world's second biggest after a 64 per cent rally in the past year.

The China Securities Regulatory Commission this month said it had referred 125 individuals and three institutions to the police for insider trading since the second half of 2013.