(Yicai Global) June 2 -- Shares of China Securities fell after Li Geping, general manager of the leading Chinese brokerage, stepped down. A media report claimed Li is under investigation by financial regulators.

China Securities [SHA: 601066] closed down 2.8 percent at CNY24.54 (USD3.47) in Shanghai today, after dropping by as much as 5.9 percent earlier in the day.

Li relinquished all of his positions at China Securities, including an executive directorship, for personal reasons, the Beijing-based firm said in a brief statement yesterday.

The brokerage giant is under intense scrutiny as one of the companies it sponsored for initial public offering was found guilty of extensive fraudulent activities by financial regulators late last year, and is on the brink of delisting from the Star Market, the science and technology board of the Shanghai Stock Exchange.

Chinese financial media outlet Caixin reported late yesterday that the China Securities Regulatory Commission is investigating Li, but provided no further details.

When Yicai Global contacted China Securities to ask whether Li had resigned because he is allegedly under investigation, the company reiterated that he stepped down for personal reasons. Fu“Li’s resignation should have nothing to do with the company's business,” a mid-level manager at China Securities also told Yicai Global.

Li was appointed GM and executive director in April 2018. Before joining China Securities, he had been president of Changjiang Securities and held several important positions at the CSRC, such as deputy director of the department for securities regulations and fund institutions.

The reputation of China Securities has been severely damaged by the fraudulent IPO of Amethystum Storage Technology, a Chinese optical storage company. The broker announced last week that it will establish a special CNY1 billion (USD141 million) fund along with accounting and law firms who also provided services in the IPO process to compensate investors who suffered losses because of the listing.

Amethystum Storage went public in February 2020 after presenting fake financial data. It also continued to falsify its numbers after listing. Following an investigation, the CSRC punished Amethystum Storage’s senior executives involved in the case last November. The company’s stock will be delisted by the end of this month.

Editors: Tang Shihua, Futura Costaglione