China is investigating the former head of a securities industry newspaper for links to a tycoon who went missing in Hong Kong last month, a local media outlet has reported.
Xie Zhenjiang, former president of the Securities Daily newspaper and chairman of its business arm Securities Daily Media Co., has been expelled from the Communist Party for “serious disciplinary violations”, respected financial magazine Caixin reported Saturday, citing anonymous sources.
The term is standard code for graft and the expulsion is the first step in a process that often ends in prosecution.
Caixin has linked the turmoil to the investigation into Xiao Jianhua, a tycoon who disappeared from his apartment at Hong Kong’s luxury Four Seasons hotel.
Some reports say he was abducted by mainland Chinese security agents and brought back to the mainland.
The editorial decisions and business operations of the Securities Daily have been under the control of Xiao’s company, the Beijing-based Tomorrow Group, according to Caixin.
The financier is reportedly under investigation in connection with China’s 2015 stocks crash, when the Shanghai index lost nearly 40 percent of its value over a two-month period.
The Securities Daily, established in 2000 by state-owned newspaper Economic Daily, is one of a handful of media outlets authorised by the China Securities Regulatory Commission (CSRC) to publish mandatory public disclosures.
The newspaper is under a two-month “rectification” for various business problems, Caixin said, without giving further details.
Shares in Securities Daily Media, which is listed on the National Equities and Exchange and Quotations, known as the New Third Board, have been suspended since early January.
“There is the possibility of an event that may have a relatively large influence on share transfer prices,” the company said in a statement explaining the suspension.
Caixin said the newspaper was required to publish negative reports about rival firms, and was forced to publish positive articles about subsidiaries or affiliates of Xiao’s Tomorrow Group.
It implied that the paper may have been used as a tool for market manipulation.
It is unclear how Xiao is being linked to the 2015 crisis, but mainland investigators have since targeted several investment executives on suspicion of insider trading.
In January former star hedge-fund manager Xu Xiang was sentenced to more than five years in prison for market manipulation.
Last Friday Liu Shiyu, chairman of the CSRC, vowed in a meeting to capture financial tycoons and bring them back to the mainland, according to Caixin.
The market would not allow “big crocodiles” — or financial tycoons — to “call the wind and summon the rain”, Liu said, adding that they would not allow them to “scalp investors and suck their blood”.