One of the four vice-chairmen at the China Securities Regulatory Commission has been placed under investigation in a further widening of the government's anti-corruption drive. The CSRC has responded by promising to step up its internal scrutiny.
Yao Gang, who was head of initial public offerings until March but now reportedly oversees bond and futures supervision, is suspected of "serious violation of party discipline”, said the Central Commission for Disciplinary Inspection on Friday evening (November 13). This is typical of the language used by the communist party’s anti-graft body when referring to suspected corruption.
It comes after Zhang Yujun, the regulator’s former assistant chairman, came under investigation in September. Yao is the most senior officer to be probed while still serving at the CSRC.
Local media speculate that the latest investigation relates to Yao's influence as former overseer of IPO approval.
The CSRC released a statement on Saturday night (November 14) after an internal meeting led by chairman Xiao Gang. It said that officials should learn lessons from the cases of Yao and Zhang and must raise their ethical awareness, said the watchdog.
The regulator added that it would enhance its internal scrutiny and investigate officials who have breached discipline, regardless of their position. This comment was reminiscent of President Xi Jinping's early-2013 pledge to pursue both "tigers" and "flies" – powerful leaders and low-ranked bureaucrats – in his anti-corruption campaign.
Yao, 53, had overseen the approval of IPOs since 2002 and was promoted to be one of the four CSRC vice-chairmen in 2009. Known as “the king of IPOs” in China, Yao had ultimately decided the fate of companies seeking to go public in Shanghai and Shenzhen. Huang Wei, an assistant chairman, took over the IPO head role in March, according to Caixin.
Yao's investigation comes after the CSRC said on November 6 that it would reopen the country’s IPO market, which was suspended on July 4 after the CSI300 index fell 27% between June 8 and July 3. Yao and Zhang were the leading officials responsible for stabilising the equity market during the turmoil.
Moreover, several senior managers at domestic brokerage firms, such as Citic Securities, came under scrutiny in August as the government ramped up its anti-graft drive after the turbulence, reported FinanceAsia, a sister publication to AsianInvestor.
Meanwhile, the CSRC has reshuffled its senior officers since the summer. It named Fang Xinghai as vice-chairman in charge of the international department, to replace Liu Xinhua, who retired on October 30. Fang was previously head of the international economic bureau.
The CSRC also appointed Li Chao as vice-chairman in charge of securities, mutual and private fund supervision. Li replaced Zhuang Xinyi, who retired on September 18. Li was one of the deputy administrators at China's State Administration of Foreign Exchange.