The file photo shows the entrance to the China Securities Regulatory Commission (CSRC) in Beijing, capital of China. (Photo: Xinhua)

China’s capital market regulator plans to put in place a system to protect the general interest of investors and create an investor compensation fund, amid growing controversies over the manipulation of shares by some Chinese listed companies.

China Security Regulatory Commission (CSRC) vice chairman Yan Qingmin said the regulator will speed up the establishment of a legal framework to protect investors and continue to guide companies to reward investors through cash dividends and share buyback programs.

Recently, the Chinese A-share market has more than 180 million investors, the majority of which are individual investors. Protecting the broader interests of investors is crucial, Yan said.

Controversies around the manipulation of stock prices are increasing on Chinese social media platform Sina Weibo, similar to Twitter. Ye Fei, a manager of a private equity fund, revealed on May 9 that manipulation of stock prices by listed companies had been practiced in the capital market under the guise of “valuation management.”

Ye Fei alleged that at least eighteen listed companies were involved in price manipulation, including ZOY Home Furnishing Corporation and Visionox, a display maker.

According to Ye, the share price of some listed companies can be increased by up to 30% through covert manipulation schemes between listed companies, private equity funds and even public mutual funds.

The CSRC spokesperson responded in an online statement on Friday that the commission took note of Ye’s revelation and demanded the companies concerned to reveal related information.

“We maintain a zero tolerance approach to market irregularities such as market manipulation and insider trading,” the CSRC statement read, “we will shed light on reported illegal behavior and publish the results. Consequently.”

Global Times