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Internet regulator bans illegal ‘margin investing’ ads online

Updated: Jul 13,2015 2:47 PM     Xinhua

BEIJING — China’s Internet regulator has ordered local authorities and website operators to pull illegal online ads touting “margin investing” — using borrowed money to buy stocks — as part of government support measures for the stock market.

The Cyberspace Administration of China (CAC) said in a statement on July 13 that it has found a large number of “margin investing” ads on the Internet, including social media platforms and messaging services, which claim they can lend money to investors or let investors use multiple security accounts to buy shares.

“Such acts have violated the securities law and relevant regulations, which forbid unauthorized security trading services,” said the CAC, adding some of the ads exaggerated their service and misled investors, thus damaging legitimate interests and disrupting stock market order.

Margin financing helped China’s stock market rise quickly, but also intensified the sell-off when investors began to pull out.

The CAC order came after the Ministry of Public Security announced they have found clues that certain trading firms have suspectedly manipulated futures trading in the stock market.

After the key stock index plunged by more than 30 percent from its June 12 peak, the government has stepped in with various measures to save the market, including pouring in funds and restricting futures trading on a major small-cap index.