Photo/VCG

Jan.1 (NBD) -- China Securities Regulatory Commission (CSRC) imposed an administrative penalty on the secretary general of the so-called "China Egg Futures Association" over market manipulations and information fabrication. 

The person who surnamed Zeng drafted and released a document titled "A joint letter to the Dalian Commodity Exchange - a letter from the China Egg Futures Association (Association)", which claimed that egg futures were under speculation, in the purpose of suppressing the price of egg futures. 

NBD noticed that Egg futures JD1609 had been doing well at the early June of 2016. But it suddenly plunged after the Association's releasing the document on June 15, 2016.  

The joint letter was first posted on an egg futures forum website www.1danji.com.cn with the ID "Egg Futures Association" on June 15, 2016, which soon spread widely on social media. JD1609 was closed 152 points lower, decreasing by 3.87 percent on that very day. The trading volume of JD1609 totaled 289,800, the highest among previous five months. 

To address the situation, CSRC soon conducted investigation.

CSRC inspectors visited the rural areas of 8 provinces and 13 prefecture-level cities to collect evidence. An inspector told NBD that some members of the Association have suffered great loss for shorting JD1609. They then fabricated the document to avoid further losses.

The Association can be found on none of the websites governed by Ministry of Civil Affairs of China, added the inspector. The Association has not been registered, has no work place, no rules and no charters. It did nothing except quoting prices every working day. Since it has no charter, it's hard to determine the person who should be held accountable.

Through great efforts, inspectors located Zeng, the Association's secretary general through the editor in chief of the Association, Guan.

Zeng argued that the joint letter was approved by over 10 members of the Association and the Association chairman, a Mr. Zhang was behind this. But Zhang and Zeng sparred over who should take the principal responsibility for the document fabrication. Other members also said they haven't edited the joint letter.

Staff of CSRC told NBD that several public reports were released on the Internet, yet some of them hide behind the complicated motivations. Once being spread through social media, such false information will likely disrupt the market order, mislead investors and harm the interest of investors eventually.

Email: tanyuhan@nbd.com.cn