Regulators launch investigation into CITIC , Guosen Securities

The Securities Association of China (SAC) said on Wednesday CITIC Securities had overstated the value of some of its financial derivatives by more than 1 trillion yuan ($156.51 billion) in its monthly reports from April to September.

The Securities Association of China said the firm inaccurately inflated the amount of its equity swap transactions in a report submitted in October.

Citic blamed the error on a “system upgrade” and said it has been corrected.

CITIC Securities, China’s biggest brokerage, and smaller rival Guosen Securities are under investigation by regulators as the government looks to clean up the financial sector.

CITIC added that the current size of its swap business is no larger than 40 billion yuan.

Police are separately investigating executives of the firm for insider trading and leaking inside information, the official Xinhua news agency reported in September.

SHANGHAI Nov 27 China Haitong Securities is under investigation by the country’s stock watchdog, two people with direct knowledge of the matter told Reuters on Friday – a move that follows probes into two other domestic brokers.

An equity swap is a form that refers to some cash exchange between realized gains on fixed interest rates and particular stocks over a particular time period as time goes by.

CITIC Securities’ Shanghai-listed shares closed down 0.69 per cent yesterday, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.74 per cent.