China to set up database to combat insider trading

SHANGHAI Oct 27 (Reuters) - China's stock market regulator will require listed companies to keep records on anyone who may have access to price-sensitive information, in its latest effort to crack down on widespread insider trading.

The China Securities Regulatory Commission (CSRC) has been waging a campaign against rampant market manipulation, insider trading and other stock market malpractice that have hurt domestic capital markets and triggered public outcries.

According to regulations published late on Wednesday, companies need to keep profiles of anyone with access to inside information, including shareholders, investment bankers, lawyers and even government officials.

Under the rules, which go into effect from Nov. 25, companies must also keep a log of their progress on activities that could impact share price, such as major restructuring, mergers and acquisitions, spin-offs and share buy-backs.

Once such plans have been made public, companies must then submit the log and profiles of the people involved to the regulator for potential use in any investigations.

"The task of regulators to prevent and crack down on insider trading has become more complicated and difficult," the CSRC said on its website. "Managing inside information from the source is therefore vitally important."

The CSRC's efforts are part of a broader government crackdown on leaks of economic data and other sensitive information that have in the past given some market insiders an unfair edge.

The Supreme People's Procuratorate said on Monday that China had sentenced two officials to jail terms of up to six years for leaking economic data. An official from the central bank and another from the statistics agency had leaked statistical figures to employees of the securities industry, it said.

The CSRC said its efforts to stamp out insider trading were part of a global regulatory fight against malpractice, although it did not say whether it was actually coordinating with agencies in other countries.

On Wednesday, Rajat Gupta, former global head of the McKinsey & Co consultancy and a former director of Goldman Sachs Group Inc , was arrested and charged with being the "illegal eyes and ears" for his friend Raj Rajaratnam, the central figure in a broad U.S. crackdown on insider trading at hedge funds. (Editing by Chris Lewis)