BEIJING (AP) — A celebrity Chinese stock trader who was arrested after last year's market collapse has pleaded guilty to insider trading and manipulating share prices, a court announced Tuesday.
Xu Xiang was one of a series of brokers and others in the securities industry who were arrested or questioned after share prices soared and then plunged beginning in June 2015. That prompted suggestions the ruling Communist Party was trying to deflect blame for the rout that wiped out some $5 trillion in stock value after state media encouraged the public to buy shares.
Xu, 40, and two co-defendants, Wang Wei and Zhu Yong, entered the plea at the start of their trial Monday in a court in the eastern city of Qingdao, the court said on its microblog account. It said no verdict had been issued.
The defendants were accused of conspiring with executives of 13 companies from 2010 to 2015 to inflate share prices through large purchases and favorable statements, according to the statement.
"The three defendants pleaded guilty and asked for leniency," the statement said.
They could face up to 10 years in prison if convicted, according to news reports. Phone calls to the court on Tuesday weren't answered.
Xu, the founder and general manager of Zexi Investment in Shanghai, was a celebrity in the Chinese business press, which dubbed him "Brother No. 1 of Private Placement."
Zexi's value increased 218 percent during the first three quarters of 2015, far ahead of the second-place competitor, which rose 94 percent, according to Caixin, a business magazine.
Xu was detained in November and formally arrested in April.
The court statement gave no financial details, but earlier news reports said Xu and his co-conspirators were accused of making several billion yuan (several hundred million dollars) in profit.
China's market benchmark soared more than 150 percent beginning in late 2014 after the state press said stocks were cheap. That led investors to believe Beijing would prop up prices if needed.
Prices hit a peak on June 12 and collapsed after changes in bank regulations fueled suspicions Beijing might withdraw its support. The benchmark fell more than 30 percent, inflicting heavy losses on novice investors who had bought in near the peak.
The downturn triggered complaints that politically favored insiders profited at the expense of small investors.
Tuesday's statement indicated the case against Xu was based on activity that began well before the stock market boom.
Also in April, the general manager of China's biggest brokerage, state-owned Citic Securities Ltd., and two other executives were arrested on similar charges of insider trading, the official Xinhua News Agency reported in April. No further details have been released.
Two other brokerages announced at that time they also were under investigation, but no arrests were reported. A reporter for a business magazine also was detained.