China is attempting to shut a revolving door that allows financial regulators to jump ship to private companies by restricting the movements of officials after they leave their posts.
The China Banking Regulatory Commission (CBRC), the country’s top industry watchdog, is to ban officials working in regulatory positions from taking jobs at financial firms within three years of their resignation, Bloomberg reported on Monday afternoon.
It is the latest in a series of moves by regulators aimed at tightening the rules in the wake of several scandals that have threatened to destabilise financial markets.
wo sources close to the CBRC told the South China Morning Post the rule is not in fact new, but the regulator is attempting to “stress and specify” existing restrictions designed to stop officials taking advantage of their positions.
The commission is considering whether or not to announce the regulations to the public or just make them internal codes of practice as before, one source said.
While rules are already in place to restrict senior officials above a certain level from jumping ship to financial companies, loopholes exist which have made enforcement difficult, the other source said.
“For example, a senior CSRC official could find a job in a state-owned fund house because that can be considered as an ‘internal job transfer’ rather than job hopping, and is thus exempt from the restriction,” he said.
Like the revolving door between Washington and Wall Street, financial professionals in China often ditch their iron rice bowls for better-paying jobs in the private sector.
In the banking sector, high-profile cases include Yang Xiaojun, formerly a senior CBRC official, who moved to China’s biggest peer-to-peer lending platform Lufax in 2015, and Ye Lingfeng, also an ex-CBRC regulator, who joined northeast China based Huaxin Trust in 2016.
Both Yang and Ye took jobs as top executives in the two companies.
A series of corruption scandals have taken down several top regulators, including the chief insurance watchdog, in recent weeks.
Last Monday, Xiang Junbo, the former chairman of the China Insurance Regulatory Commission (CIRC), was dismissed from his post for “serious violation” of Communist Party discipline.
On April 14, Yang Jiacai, the assistant chairman of the CBRC was reported to be “out of contact”. Mainland media outlet Caixin reported that he was under investigation, together with his wife and son who allegedly had large sums of capital of unclear origins in their accounts.
And last Friday, Feng Xiaoshu, a former regulator responsible for reviewing initial public offerings under the China Securities Regulatory Commission (CSRC), was banned for life and fined almost half a billion yuan for trading stocks under his mother-in-law’s and sister-in-law’s names, and taking profit by using inside information.
Read the original article on the South China Morning Post.
