Moody's reviews CITIC Securities' ratings over gov't probe

Moody's has placed CITIC Securities' ratings on review for downgrade after executives from the largest brokerage in China were involved in a government probe into market manipulation.

The rating agency said it will review CITIC Securities's Baa1 foreign currency long-term issuer rating and P-2 foreign currency short-term issuer rating to decide whether it will downgrade them.

The action came after four senior managers at CITIC Securities were put under "criminal compulsory measures" for suspected insider trading, as part of government efforts to contain repeated plunges in the stock market.

Compulsory measures can include arrest, detention, summons, bail pending trial, or residential surveillance.

Moody's believed the ongoing investigation, the outcome and timing of which are highly uncertain, could increase the brokerage's operating risk and deplete franchise value.

During the review period, Moody's will assess the longer term implications that could ultimately lead to a weaker financial position.

The review will also consider the impact on the firm's credit standing from potential regulatory actions, which could include financial penalties, restriction of activities or remedial actions. Endi