Dozens of Chinese securities brokerages that were ordered to correct financial statements have been caught misstating their earnings by hundreds of millions of dollars, state press said yesterday.
In January, securities houses reported combined losses of 500 million yuan (US$60 million) for last year but have since been obliged to own up to losses totalling 4.5 billion yuan (US$543 million).
Names of the troubled firms were not listed but of the 21 brokerages which posted losses, 11 of them lost more than 150 million yuan and the worst performer had annual losses of 1.6 billion yuan, the Shanghai Daily said.
Although 26 of the 47 firms which have posted last year's earnings were profitable, profits amounted to only 1.12 billion yuan, the Shenzhen-based Securities Times said in a report issued on Monday.
Last year the government began demanding brokerages allocate funds to cover trading losses but securities houses seemingly ignored the rules with several providing fraudulent earnings, the newspaper said.
"Most market experts fully expected these losses to rise dramatically," said Zhang Li, analyst at Huatai Securities.
Suspicious regulators concluded that the losses reported in January were drastically understated and ordered the brokerages to redo their books.
It was unclear what sort of further action regulators might take.
Corruption remains a serious problem in China's brokerage industry despite Beijing's crackdown over the last two years on rampant irregularities and misconduct that has gone on in the industry for more than a decade.
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