(Yicai Global) Aug. 9 -- Chinese authorities have caught a gang of suspects that have allegedly manipulated stock pricing through deceptive orders done through the Shanghai-Hong Kong Stock Connect, which marks their second offense of similar nature.
Shanghai police have arrested three suspects, two of them on charges for stock market manipulation, local news outlet Shanghai Observer reported, adding that the profits amounted to over CNY20 million (USD2.9 million) within the circle.
The suspects, led by one particularly talented trader Mr. Tang who gained "celebrity" status within the group, selected stocks whose market cap is small which made the exploitation of share price fluctuations easier. They bid up prices by placing buy and sell orders, while canceling the orders afterward and trading between each other.
"We found that on a number of trading days, the percentage of canceled purchases via accounts controlled by Tang and the other suspects exceeded 50 percent of the total daily order volume," Wang Xin, the police's deputy head said.
This was not the first offense for the gang as China Securities and Regulatory Commission gave them four hefty fines after another unfair trading case. From 2012 through 2015, the group had amassed considerable amounts of funds to manipulate more than 10 stocks. Tang fled to Hong Kong, where he started using several securities accounts to trade mainland-listed shares.
Editor: Emmi Laine