(Yicai Global) May 17 -- Shares in Jiangsu Lettall Electronic and Zoy Home Furnishing plunged sharply today after China’s securities regulator said they were next in line as it probes accounts suspected of manipulating their stock price.

Lettall Electronic's share price [SHA:603629] plummeted by the exchange-imposed limit of 10 percent this morning and was trading down 8.75 percent at CNY19.18 (USD3) at 2 p.m. China time. Zoy Home Furnishing's stock [SHA:603709] sank 6.54 percent and was trading at CNY17.29.

The China Securities Regulatory Commission will continue to maintain a ‘zero tolerance’ stance towards market manipulation and other illegal behaviors and will heavily penalize companies, their majority shareholders, private equity funds, public funds and individuals that disrupt the market order, the watchdog said on May 14.

Last week Zoy Home’s efforts to push up its stock price were exposed by a former private equity fund manager called Ye Fei who was left out of pocket by the furniture seller’s antics. He claims that he was contacted through an intermediary to participate in the so-called ‘market value management’ of Huzhou, southeastern Zhejiang province-based Zoy Home, which is the buying of shares in the open market so as to push up the stock price.

However, the intermediary did not reimburse Ye and his team of stock price pushers according to their agreement, causing them losses. After failing to reclaim the funds, Ye said he decided to expose the scandal and he will continue to disclose the names of other listed companies that have conducted similar unlawful practices.

According to Ye, private and public funds as well as brokerages are participating in market rigging, and it is not just hot money controlled by investors seeking a quick buck. As a result, the CSRC is stepping up its investigations.

Other firms rumored to be part of the probe but which were not named by the CSRC also plunged. Shandong Longji Machinery [SHE:002363], Eastern Pioneer Driving School [SHA:603377], Eurocrane China [SHA:603966], Lucky Harvest [SHE:002965] and KTK Holding [SHA:603680] all tumbled by 10 percent. Guangzhou Haozhi Industrial [SHE:300503] crashed 15 percent to CNY10.39 (USD1.61).

The CSRC has investigated 65 companies since it started cracking down on market rigging last year.

Editor: Kim Taylor