The Chinese government will punish firms involved in the so-called “backdoor” listing of GF Securites, as it continues to crack down on insider trading and other market irregularities that analysts say are rampant, Reuters reports.
It will punish Yan Bian Highway Construction¸ which G F Securities used as a reverse takeover target to obtain the listing, along with key shareholder Jilin Aodong Medicine Industry Group and other firms that failed to properly disclose holdings.
The government also said that it suspected a number of people who had obtained details about the deal engaged in insider trading.
The China Securities Regulatory Commission said it had obtained evidence related to the listing, which it has turned over to police.
G F Securities was the first brokerage in China to obtain a stock market listing through a reverse takeover, and as it made the announcement market participants began buying up other companies rumored to be targets of similar takeovers.
The crackdown comes at a time when the government is trying to put a lid on speculation.
“The government is sending out a clear message to the market,” said a top fund manager. “It wants to clamp down on stock speculation and insider trading.”
