HONG KONG — Authorities in China have opened two investigations into the country's biggest brokerage firms amid market turmoil.
The police are investigating eight executives from Citic Securities, China's biggest brokerage firm, on suspicion of illegal securities trading, Xinhua, the official news agency, reported late Tuesday.
In addition, staff members from the main stock market regulator, the China Securities Regulatory Commission, and a reporter were taken into custody, Xinhua said.
The reporter, from the respected news outlet Caijing, was identified by Caijing as Wang Xiaolu. He wrote an article last month that said the government was considering withdrawing its support for the stock market. The report prompted a denial from the securities regulator, but was later seen as contributing to a huge plunge in Chinese stocks in late July.
China's main stock market index has fallen more than 40 percent since early June. On Wednesday, it fell 1.2 percent, following declines of 8.5 percent on Monday and 7.6 percent on Tuesday.
The police ministry announced July 12 that investigators had found "evidence to suspect that individual trading companies are illegally manipulating securities and futures exchanges." It gave no details at the time of which firms were targeted.
Four other top brokerage firms said in announcements late Tuesday that they were being investigated by the securities regulator over suspected violations of China's laws on verifying the identity of securities clients. The companies — Haitong Securities, GF Securities, Founder Securities and Huatai Securities — said that they would cooperate with the investigation and that their businesses were operating normally.
Chinese officials have used such investigations in the past to help tamp down frothy markets. But given the current slump, such inquiries, including one this month that encroached on a securities trading affiliate of Citadel, the big American hedge fund, appeared more aimed at bolstering investors' confidence.
Michael Pettis, a finance professor at Peking University and a senior associate at the Carnegie Endowment for International Peace, said that the problem with the government's efforts to support the markets was that success depended greatly on public perception of its credibility.
"Beijing can signal all it likes when it comes to the stock market," he added, "but it can only cause prices to rise if it purchases large amounts of stocks; signaling no longer works."
Information from the New York Times and the Associated Press was used in this report.