Chinese authorities announced on Monday that several high ranking employees of one of the largest brokerage firm in the country are being probed over allegations that they engaged in insider trading of stocks. The government's move is seen as an indication that it will not hesitate to employ any means at its disposal to prevent the ongoing massive selling of Chinese stocks.

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Xinhua identified some of the CITIC Securities Company executives currently investigation as Cheng Boming, Yu Xinli and Wang Jinling.

Cheng is the firm's president, Yu is the operations officer, while Wang is the deputy IT head. CITIC Securities parent company CITIC Group is a government-owned investment firm that was established more than 30 years ago.

Blackfriars Asset Management spokesperson Tony Hann said Chinese regulators are currently conducting a campaign to punish persons who they suspect are engaging in the massive sale of stocks in the Chinese stock market.

The news that its officers are being probed has caused CITIC Securities shares to dip even further. Its share price has lost almost 60 percent of its value last June. During the heydays of the rising Chinese stocks, CITIC Securities was one of the firms that extended massive margin lending to investors.

State media have reported that some of the CITIC Securities officials under investigation have already admitted to insider trading.

Under China law, insider trading includes private or confidential data that can influence the price of shares in the market. However, regulators are given discretion to determine what kind of data is considered confidential.

CITIC Securities has reportedly facilitated an international equity swap that allowed foreign firms to increase their exposure to the Chinese stock market despite laws in China limiting the amount of Chinese shares that non-Chinese investors should hold.

The massive selling of Chinese stocks has also signaled the decline of CITIC Securities. Before June last year, the Chinese brokerage firm had nearly the same amount of market capitalization as the Swiss investment firm UBS.

Reuters reported that despite the publicized investigation, share prices in the Chinese stock market grew by nearly five percent on the day of the announcement. The Chinese government has reportedly launched a massive purchase of stocks to offset the losses this week.

TagsCitic Securities, Chinese Stocks, Chinese Stock Market, hangseng index, china stocks, insider trading, chinese regulators