CITIC Securities’ Zhang Yujun, Cheng Boming may be charged for “economic espionage”

[Bowen Press Exclusive] This agency has learned that former assistant to the Chairman of the China Securities Regulatory Commission Zhang Yujun, and former general manager of CITIC Securities Cheng Boming were arrested along with several other high-ranking CITIC Securities officials. They may be charged with the crime of “economic espionage.” Authorities have ascertained that while the government was carrying out an emergency bailout of the stock exchange, they leaked secrets about the government’s policy to foreign entities and engaged in insider trading.

The Ministry of Public Security has disclosed that there is an ongoing investigation into the events surrounding the July stock market crash. They have discovered collusion between domestic and foreign securities companies that involved the leaking of the government’s bailout strategy and evidence of dumping and short-selling of shares. Among these the state-owned CITIC Securities is the most serious violator. In late August the authorities arrested high-ranking CITIC Securities officials President Xu Gang and Executive Committee members Ge Xiaobo and Liu Wei.

On September 15, 2015, the authorities announced the arrest of CITIC Securities General Manager Chen Boming. This was the eighth CITIC Securities official detained, half of the top management of CITIC Securities. The charges against them are believed to be insider trading and disclosure of inside information.

One day later, on September 16, 2015, the authorities arrested the assistant to the Chairman of the China Securities Regulatory Commission Zhang Yujun. Zhang Yujun become the highest-ranking China Securities Regulatory Commission official ever arrested. He’s also the highest-ranking official of the “One Bank and Three Commissions” (abbreviation for The People’s Bank of China, the China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission) to be arrested since the 18th National Congress of the Communist Party in November 2012 elevated Xi Jinping to Communist Party general secretary. Although the authorities only announced that Zhang was arrested for alleged serious violations of discipline, outside observers assumed that it involved the bailout issue.

Ministry of Public Security sources reveal that the real reason for the arrest of Zhang Yujun is his collaboration with CITIC Securities in revealing inside information on the central government’s bailout plan. CITIC Securities used this information to engage in insider trading, resulting in large gains. But more seriously CITIC Securities high officials are alleged to have leaked the information to foreign entities, and in collusion with them looted China’s stock market, helping give rise to the July crash.

Sources reveal that after the center was made aware of this matter they were furious, and the Party leadership decided to punish the perpetrators severely. The Public Security Ministry’s investigation of the case against Zhang Yujun and Chen Boming is complete, now further judicial proceedings are underway. The criminal charge of “economic espionage” is being considered. If this is implemented, it will be the first case of “economic espionage” in the PRC’s history.

Sources say that the Communist Party has determined that the July stock market crash was the result of domestic and foreign collusion, enticing the Chinese government into a conspiratorial trap. Not only did it seriously threaten China’s financial stability, but the central government and more than 100 million shareholders were thoroughly discredited, resulting in a loss of credibility. Authorities expect the severe punishment of Zhang Yujun and CITIC Securities to play a deterrent role—kill one to warn one hundred—and regain the people’s trust.