China discovers big accounting scandal

China discovers big accounting scandal
Highlights

China’s securities association said on Wednesday that CITIC Securities had inaccurately inflated its derivative business by 1.06 trillion yuan ($165.92 billion) in a report submitted in September.

China’s securities association said on Wednesday that CITIC Securities had inaccurately inflated its derivative business by 1.06 trillion yuan ($165.92 billion) in a report submitted in September.

The news comes after probes into China's largest brokerage led four of its senior executives to confess to insider trading. In its monthly report to the securities association, CITIC reported inaccurate numbers on its over-the-counter derivative business, the Securities Association of China said in a statement posted on its official website.
According to the statement, both new and terminated swap business between April and September were inflated by an accumulated 1.06 trillion yuan, although the error did not affect the month-end net size of the business.
The SAC did not accuse CITIC of any illegal behaviour and is investigating the matter. CITIC said the figures for the new and terminated swap business between April and Sept were incorrect due to system upgrades, while the figure for the outstanding size of the business was correct.
The wrong figures had already been amended at the beginning of this month, the brokerage said in an email response. CITIC added the current size of its swap business is no larger than 40 billion yuan. Beijing has been intensifying its probes into brokerage misdemeanors since stocks swooned in June.
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