CSRC launches probe to check whether there has been manipulation by fund managers in share sales
China's securities regulator has launched an investigation into fund management companies to see whether there has been any manipulation of the price-setting process for domestic initial public share offerings, sources said.
The China Securities Regulatory Commission had ordered fund management companies to provide documents this week concerning the first prices offered during the consultation period for a potential listing, when institutional investors tell the underwriters what they will pay for a given stock, a source said.
As part of the investigation, fund management companies are also being required to explain their reasons for the range and their actual buying activities after the consultations.
The CSRC in August 2004 brought China's listing pricing practice in line with most other markets by ordering that the final range be decided through a consultation with institutions. However, the institutions are not bound by any price offered during these consultations.
Before the policy change, underwriters set listing prices according to their own calculations, based on a company's financials.
'It is possible that the regulator is checking into whether some institutional investors colluded with the listing companies or underwriters on a higher range to push up the final pricing,' a fund manager said.
