A bond trader surnamed Wang at China AMC, the sixth largest mutual fund manager onshore, is alleged to have made an illicit gain of RMB 17.7m ($2.6m) by timing trades using undisclosed information from 2009 to 2011, according to Securities Times, a state-run publication under People’s Daily.
The case is highlighted because Wang, who has a law degree, did not give any testimony when faced with the allegations, the report noted. When regulatory officials came to question him in 2014, he tried to flee by making an excuse to go to the toilet, the report said.
The case involves what is known as “rat trading” in China, which is when a licenced financial professional times the trading of shares in his personal account to take advantage of price movements caused by his firm’s larger trades in mutual funds (known as “front running” in the US).
The investigator alleges that Wang used a securities account under the name of his parents and made trades based on non-public information. The investment pattern involved Wang trading securities in China AMC’s funds, then trading his private positions, according to the report.
The Ministry of Public Security, commonly known as gongan, built the case by matching the trading time and pattern of the mutual funds, Wang’s login information and activity in his parents’ account, the report said.
It is unclear whether a final judicial ruling has been made. However, the report said that case will be used as a reference for future count rulings.
Back in 2014, China AMC had three people, including Wang, detained due to an insider trading scandal. The other two were Luo Zeping, a fund manager, and Liu Zhenhua, general manager at the firm’s trading desk.
Last week, broadcaster CCTV reported the details of a rat trading case by ICBC Credit Suisse Asset Management former deputy head of trading Wu Tuofu, shortly after he was charged.
