Chinese authorities have detained several people—including broker employees, a regulator, and a journalist—for possible insider trading and falsification of information, state-run media Xinhua reported.
Xu Gang, the former chairman of brokerage development and head of the research department at China’s largest investment bank, CITIC Securities, was among the detainees, according to well-respected business magazine Caixin (link in Chinese).
Xu, a member of the executive committee who has been with the bank since 1998, oversaw the stock trading and equity underwriting operations of one of the most important players in China’s stock market in recent years.
With about $667 billion in assets under management, CITIC’s parent China Citic Banking ranks as the 50th largest bank in the world. But CITIC Securities’ reach and influence in China is much wider than those figures might suggest—it is the top investment bank in China when ranked by revenues:
CITIC is also top in equity underwriting:
On these measures, CITIC beats out China’s massive homegrown banks and Wall Street’s biggest, most experienced players, according to Dealogic data. Xu’s arrest comes as Beijing has tried to stem short-selling and censor negative information about the country’s dropping stock markets.
Xu, who was also a managing director at the bank, created the banks research division and was responsible for running the brokerage for several years as it led the industry.
There are few details released yet about the detentions, and CITIC Securities only said in a statement to the Hong Kong Stock Exchange that it had received no notice of an investigation. On Aug. 18, Xu’s brokerage responsibilities were handed to the head of the bank’s asset management division, and Xu was put in charge of “back office and IT services” with no further explanation.