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* CITIC Sec overstates derivatives business by $166 bln
* Mistake appears in statistical report to industry body
* CITIC says error due to IT upgrade; no impact on earnings
* Brokerages firm under pressure by regulators after summer
By Shu Zhang and Nicholas Heath
BEIJING, Nov 25 CITIC Securities Co,
China's biggest brokerage, overstated some of its financial
derivatives by more than 1 trillion yuan ($166 billion) in
monthly reports from April to September, the country's
securities association said.
The Securities Association of China (SAC) said that CITIC
reported inaccurate numbers in statistical reports on
over-the-counter equity swap deals partly carried out during the
summer's stock market rout.
The SAC, a quasi-regulatory body supervised by the China
Securities Regulatory Commission, said it was investigating the
matter, but has not accused CITIC Securities of any wrongdoing.
As the wrong figures were not included in CITIC's quarterly
financial filings, the brokerage's reporting error has no impact
on its reported earnings, an investor relations representative
at CITIC told Reuters, and CITIC's shares were largely unmoved
by the announcement.
The over-the-counter derivatives figure was simply "a
business indicator required by the regulator", the
In an emailed statement, CITIC said the error was caused by
a system upgrade, and the figures were amended at the beginning
of this month.
The issue emerged amid wide ranging investigations by the
authorities into brokerage misdemeanors after China's stock
markets crashed in the summer. The official Xinhua news agency
reported in August that four CITIC Securities executives had
owned up to insider dealing.
CITIC said the current size of its swap business is no
larger than 40 billion yuan.
CITIC Securities' Shanghai-listed shares closed down 0.69
percent on Wednesday, while the CSI300 index of the
largest listed companies in Shanghai and Shenzhen rose 0.74
($1 = 6.3888 Chinese yuan renminbi)
(Reporting by Shu Zhang and Nicholas Heath, with additional
reporting by Samuel Shen and Engen Tham in SHANGHAI; Editing by
Simon Cameron-Moore, Lisa Jucca and Ian Geoghegan)