Banking & Finance

The black sheep

Wudaokou old boys in stock market probe


Zhang Yujun: now detained

You may not have heard of the Wudaokou School of Finance. It’s an elite graduate school – now part of Tsinghua University – that was originally set up by China’s central bank in 1981 to boost skills in the fledgling financial system. (It was named after a popular hang out spot for students from Beijing’s top universities.)

According to, the school was in the news last week because of the activities of two of its old boys. The two individuals were Cheng Boming – general manager of Citic Securities – and Zhang Yujun – an assistant chairman at China’s securities regulator, the CSRC. Both have been detained by China’s anti-graft body for ‘serious violations’.

Zhang is the highest ranking CSRC executive to be probed for corruption so far and the news took many by surprise. As recently as last month the domestic media had been circulating speculative reports that Zhang was set to be promoted to the position of deputy governor at the central bank. The 52 year-old had spent his career in the securities industry, and is the only government official to have helmed both the Shanghai and Shenzhen stock exchanges (the latter for eight years). He was regarded as an “innovative official” by local investment bankers (he holds doctorates in economics and law from Peking and Renmin Universities respectively) and had been a keen advocate of growing China’s local fund management business.

However, his career seems to have come unstuck, reckons, because he was also a key architect of this summer’s bureacrat-led bailout of the plunging A-share market – orchestrating a “national team” of brokerages to borrow state money to push up the market. The strategy backfired. Stock prices continued to fall, and rather than restore confidence, it damaged the government’s reputation for competent economic management.

Fellow Wudaokou alumnus Cheng Boming was also a key part of this “national team” initiative. He has been put under investigation for insider trading. Nor is he alone: eight other senior Citic Securities managers are being probed for the same thing. People’s Daily describes the sweep as part of the ongoing effort to “uncover rats hidden in our securities institutions”.

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