Shanghai-listed company suspended over suspicions of price rigging

China's stock market watchdog is investigating Shanghai-listed Hangxiao Steel Structure Co., Ltd. which is suspected of rigging stock prices with a bogus contract announcement, Xinhua learned on Thursday.

In an unprecedented move, the China Securities Regulatory Commission (CSRC) made a public announcement on a sensitive case before closing the investigation, which analysts say might indicate a tougher stance on malpractice.

The commission has urged the Shanghai Stock Exchange and the local regulatory bureau to also investigate. "We will firmly punish without leniency those who break the law," a senior CSRC official told Xinhua.

China's securities authorities intended to react immediately to abnormal market fluctuations and information disclosures with ulterior motives, said the official.

Hangxiao Steel Structure stocks were banned from trading Monday. Nobody from the company was available to comment on Thursday.

The company issued a public statement in February claiming that it had signed a contract worth 37.4 billion yuan (5.1 billion U.S. dollars).

In response, its stock prices more than doubled since Feb. 12 from its opening price of 4.24 yuan to 10.75 yuan, hitting the daily maximum rise of 10 percent 10 times within a month.

Soon after, the company issued another statement saying the contract might prove unfeasible.

The contract was allegedly with the China International Fund Ltd., a Hong Kong-registered company with construction projects in Africa, to sell construction products and services for public housing projects in Angola.

Hangxiao, based in Xiaoshan Economic Development District of Hangzhou, has a registered capital of 248 million yuan and was listed at Shanghai Stock Exchange in November 2003.

Under Chinese law, the top management, directorate and board of directors of listed companies are liable to ensure the truth, accuracy, completeness, timeliness and fairness of disclosed information.

Listed companies are also required to promptly clarify rumors pertaining to major changes in the company, such as mergers and acquisitions, so as to ensure the "fair play" among investors. Publicizing false information is a criminal offense.

Source: Xinhua