Wang Xiaoshi case (on leaking the names of the Stock Issuance Committee)
 

Securities regulatory official punished for taking bribes         Wang Xiaoshi, an official with China Securities Regulatory Commission (CSRC), was sentenced to 13 years in prison for taking bribes. His personal properties of 120,000 yuan (about 15,000 US dollars) will be confiscated, according to the verdict passed by Beijing Municipal No. 1 Intermediate People's Court on Friday. Wang, aged 44, accepted 726,000 yuan (some 90,750 US dollars) in bribes from Fujian Fengzhu Textile Technology Company Limited in 2002 to seek illegal interests for the company in its initial public offering (IPO), according to the court. Another defendant, Lin Bi, an employee with Northeast Securities Company Limited, was given a ten-year jail term for introducing the bribers to Wang. Lin took 674,000 yuan (83,209 US dollars) of bribes from Fujian Fengzhu Textile Technology Company Limited when the securities company was dealing the IPO shares of Fujian Fengzhu Textile Technology Company Limited, according to the court verdict. The court also found that Lin asked for 318,000 yuan (39,750 US dollars) of bribes from Yasheng Industry (Group) Company Limited in Gansu Province when Lin's securities company was dealing with Yasheng's bonds in 2001. Lin's personal property of 100,000 yuan (12,500 US dollars) would be confiscated, according to the court verdict. Source: Xinhua

Corrupt securities official jailed (Shenzhen Daily) [12 Dec 2005]   A FORMER securities regulatory official was sentenced to 13 years in jail Friday for taking bribes to fast-track approval for a Fujian Province textile technology company's initial public offering. Wang Xiaoshi, a middle-ranking official at the China Securities Regulatory Commission (CSRC), went on trial at the Beijing No. 1 Intermediate People's Court, Xinhua said Friday. Wang, 44, worked for the CSRC's public offering supervision department in 2002 when he helped Fengzhu Textile Technology get speedy approval to list on the Shanghai stock market. In return, the company gave Wang more than 720,000 yuan (US$88,700). Wang was arrested in November last year and court proceedings began last month. The prosecutor initially alleged that Wang and another defendant, Lin Bi, conspired to take 1.4 million yuan in bribes but the court later decided not to press the charge, citing a lack of evidence. Lin ran an investment management company in Beijing and acted as a middleman between Wang and the Fujian company. He was ordered to serve 10 years in prison for taking nearly 1 million yuan in bribes from companies for helping them on securities issues. Wang was the third CSRC official to have been jailed for corruption in the past 10 years. The court also confiscated personal assets belonging to Wang and Lin valued at 220,000 yuan, including a laptop and a Honda car. IPO Review Official Arrested China International Business January 01, 2005 - by Ren Wei   Disgruntled Chinese stock investors now have another reason to blame the watchdog. In November, Wang Xiaoshi, 43, an official with the China Securities Regulatory Commission's listing department was arrested on corruption charges. The deputy head of the department was reported to have taken bribes worth of 200,000 yuan (US$24,164) by selling the name list of experts who screened Initial Public Offering (IPO) applications. Wang has been in custody of the Beijing Xicheng People's Procuratorate since November 4, the Beijing Times reported. Before taking his post at the listing department, Wang was involved in the preparatory work for the technology board on the Shenzhen Stock Exchange. According to the Xinhua news agency, Wang took the bribes through a consulting firm in Fuzhou City, Fujian Province. Wang allegedly disclosed the identities of the listing review panel to Fujian Fengzhu Textile Science & Technology Co, a listing applicant. To the amazement of investors, around 20 people were embroiled in the case including Lin Bi, 35, a manager at Northeast Securities Co, who was also arrested. The scandal has fueled investors' worries about the validity of some IPOs. As of November, the Shanghai and Shenzhen benchmarks have both fallen about 10 percent from the close of 2003. For China, where the securities regulators harp on the principals of transparency and justice, Wang's scandal has stirred chaos as investors and analysts suspect more frauds hidden under the old IPO system. the securities regulators harp on the principals of transparency and justice Before 2004, the listing review panel consisted of 80 officials, lawyers, investment bankers, fund managers, scholars and accountants. A company would not be allowed to float shares unless it received an approval from the panel. The names of the review panel were not published. The regulatory rules stipulated that a company must win five of seven votes from each review group to secure a listing. Discouraged by the sophisticated and strict procedures, a few applicant companies that could not meet the listing requirements embarked on a more risky strategy - bribing the review experts. Wang, as an official in charge of the procedure, was a primary target of those companies. Though details of the scandal are not known yet, investors believe that some of the experts within the panel also committed crimes. Fengzhu Textile was approved to sell shares on the Shanghai Stock Exchange at the beginning of 2004, but had to postpone the listing due to the problems in its prospectus. Insiders say it was Wang that paved the way for a final IPO sale by Fengzhu, despite the company's problems. The regulatory commission reformed the IPO system at the end of 2003. The watchdog reduced the panel from 80 members to 25 and increased the number of professionals involved. To avoid illegal behavior by officials within the commission, the regulator only picked five members from CSRC, with the other 20 coming from other governmental departments, fund management firms, law and accounting firms and investment banks. Tu Guangshao, vice chairman of the commission said recently that the new system, under which all the identities of the 25 members are made public, has proved successful. "No misconduct of such kind would happen again," said Tu. The CSRC froze approval of IPOs in September without saying when new shares sales would resume. The CSRC is likely to resume IPOs after the Chinese New Year holiday in February.

Securities watchdog should also be watched Xin Bei China Daily  Updated: 2004-11-18 09:47 Wang Xiaoshi, a China Securities Regulatory Commission (CSRC) official working closely with its approval committee, was reported to have been arrested earlier this month, for allegedly taking bribes for disclosing information about members of the approval committee to soon-to-be listed companies. The arrest occurred less than one year after the CSRC published a regulation to introduce more transparency in governing its approval committee last December. As the country's securities watchdog, the CSRC plays an essential role in supervising the development of the country's decade-old stock markets. Since the domestic stock markets turned bearish in 2001, many people pointed their fingers at the CSRC for giving the greenlight to underqualified companies to be listed in the market. The poor performance of some newly listed companies, though not the only cause of a weak market, seriously dampened investor confidence in the market. In response, the securities authorities took some overdue measures to get its own operations in order. Besides allowing greater public scrutiny of its powerful approval committee, the CSRC raised criterion for applicants' initial public offering and highlighted securities brokerage firms' accountability in underwriting new shares. All were needed efforts. But a remaining question asks, who will supervise the supervisor itself. Self-supervision is important, but not important enough. Few could believe the latest arrest of a CSRC official was only an isolated case that had nothing to do with the lack of effective supervision over the market watchdog itself. Under such circumstances, shareholders are justified to ask hard questions of the securities authority, particularly about how it will fulfill its commitment to protecting investor interests. To root out all sorts of wrongdoings that have crippled the domestic stock market, the CSRC should, first of all, prevent its own staff from abusing its power. The arrest not only reveals how serious the problem is, but also offers a chance to address it. Suspicion will only thicken to further undermine the development of the stock market if the CSRC can not face the problem squarely.