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'Sabotaged the order of capital markets': Beijing dismisses former regulator from party

  • The Shanghai and Shenzhen stock markets plunged more than 40 percent in the summer of 2015
  • That fall, Beijing began investigating Yao Gang, vice chairman of the China Securities Regulator Commission
  • Chinese authorities announced Thursday that Yao can no longer hold public office
Yao Gang, former vice chairman of China Securities Regulatory Commission (CSRC).
Reuters
Yao Gang, former vice chairman of China Securities Regulatory Commission (CSRC).

Beijing has officially expelled one of the country's top markets regulators during the 2015 stock crash.

The Central Commission for Discipline Inspection said on its website Thursday that Yao Gang, former vice chairman of the China Securities Regulatory Commission, has been "dismissed from the party and public office."

In addition to "serious violations of political discipline," Yao "sabotaged the order of capital markets and the political environment of the securities regulator," according to a translation of the Mandarin Chinese statement.

Yao, 55, reportedly became vice chairman in 2008. In Nov. 2015, the Central Commission for Discipline Inspection said that Yao was being investigated for suspected "serious breaches of discipline," which typically implies a corruption probe, Reuters said.

"Yao was removed almost two years ago on these charges, so this is really just formal acknowledgement of an action that was long anticipated," Michael Hirson, director for Asia at consultancy Eurasia Group, said in an email to CNBC.

"The anti-corruption campaign in the financial sector is going through another round right now, focused in particular on association with former [China Insurance Regulatory Commission Chairman] Xiang Junbo," Hirson said.

The Shanghai and Shenzhen stock indexes plunged more than 40 percent in the summer of 2015, and regulators frantically intervened to prevent more selling. A so-called national team was also reportedly formed to buy stocks and support the market.

In September of that year, regulators announced plans for a circuit breaker program to limit stock drops. But the system backfired when it was implemented in January, cutting trading short after less than half an hour and sending the Dow Jones Industrial average down more than 300 points.

The China Securities Regulatory Commission suspended the program that day.

Liu Shiyu became chairman of the China Securities Regulatory Commission in February 2016, replacing Xiao Gang, who had led the organization for three years.

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