China suspects corruption at CSRC

One of the top figures at the private equity regulator is being investigated for political corruption.

Liang Li, chief of the Investor Protection Bureau at the China Securities Regulatory Commission, has been placed under investigation by a Communist Party watchdog, after suspicions emerged over him allegedly “violating laws and principles”, according to local media citing a confirmation by the CSRC.

Li was detained by the Central Discipline Inspection Commission's sixth office, which has started cracking down on corruption in various regions, including the northern province of Shanxi, where a string of corrupt officials and former government employees have been uncovered recently, reports said.

The allegations concerning Li have also been linked with those into Wancheng Ling, businessman and younger brother of Zhengce Ling, former vice chairman of Shanxi's political consultative conference. Ling was investigated last June in connection with allegations of graft.

The probes shine light on the Chinese regulator, which only recently became the official supervisor for China’s private equity industry, and has since been working to clarify regulations for the industry.

In August, the CSRC had released and implemented new rules for private equity funds in China concerning fundraising for Chinese investors. The new rules, which included specifications on reporting, as well as restrictions on fund marketing, apply to domestic private equity, venture capital, funds of funds, hedge and debt funds, and were effective immediately.

The regulatory body has also previously come under fire for its top officials offering IPO approvals to companies related to their business connections or high-level officials. The CSRC could not be reached for comment.