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China's top stock market regulator Guo Shuqing said yesterday at aforum in Beijing that his agency will resolutely fight IPO pricefixing practices by underwriters who take gifts from issuers. "The China Securities Regulatory Commission (CSRC) will usethe most rigorous measures to clamp down on such irregularpractices, perhaps even amending the laws," Guo, CSRC'schairman, told a gathering of officials and securities brokeragefirms' executives yesterday. China's stock markets have long been troubled by excessively highfirst issuance price-to-earnings (P/E) ratios, because of a lack ofeffective supervision of IPO pricing. Underwriters, accountants, private equity investors and financialPR companies sometimes make the fundamentals of an issuer lookbetter than they really are, so that they can set a higher issuingprice. In this way, even if the price falls precipitously after theissuance, the original shareholders in the issuing company canstill make a profit from selling their shares. On April 28, the CSRC issued a revised guideline on new shareissuance reforms, which requires an issuer to disclose additional,detailed information if its IPO P/E ratio is more than 25 percenthigher than the average P/E ratio of its listed peer companies. "The new guideline reinforces the regulator's power over IPOapprovals, instead of letting the market decide," LiuShengjun, deputy director of the CEIBS Lujiazui InternationalFinance Research Center, told the Global Times yesterday. The requirement has been interpreted as a way to bring down P/Eratios, because investment banks, which get a commission fromsuccessful issuance, would not want to risk spoiling the deal bysetting the price too high, Money Week newspaper reported in April,citing an unnamed investment bank executive. Meanwhile, Shenzhen-listed Yunnan Green-Land Biological TechnologyCo suspended trading yesterday as it is facing several IPO fraudcharges, including overstating incomes and asset values. The CSRC started to investigate the company from March 17, 2010,but could not decide on any punishment as of April 24, the companysaid in a statement Friday. "There are too many interests involved in new share issuance.Guo alone cannot change the system, and he needs to persuade thehigher officials to support him and take certain special measures,such as setting up a securities court to try such fraud casesdirectly instead of using local courts," Liu said. The CSRC's Investor Protection Bureau issued a statement yesterdaysaying that it would try to push for the Securities Law to beamended and made more effective. The e-commerce company in China offers quality products such as China Gift Packaging Boxes , China Printed Gift Boxes, and more. For more , please visit Gift Packaging Boxes today!
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