AS MARKETS FLAIL, CHINA INVESTIGATES LARGE BROKERAGE FIRMS

[Four other top brokerage firms said in announcements late on 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.]

By Neil Gough

HONG KONG — The 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, China Securities Regulatory Commission, and a reporter were been taken into custody, Xinhua said.

The reporter, from the respected news outlet Caijing, was identified by Caijing as Wang Xiaolu and 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.

Four other top brokerage firms said in announcements late on 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.”

@ The New York Times

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U.S. TO SUPPORT SRI LANKAN PLAN ON WAR CRIMES INQUIRY

[Ties between Colombo and Washington grew strained during the tenure of President Mahinda Rajapaksa, who resisted international pressure to investigate war crimes allegations and suffered a surprise defeat in an election in January election. Tom Malinowski, assistant secretary of state for democracy, human rights and labor, who accompanied Ms. Biswal on the visit, said the new government’s approach under President Maithripala Sirisena had been to defend the country’s interests without being defensive.

By Dharisha Bastians

COLOMBO, Sri Lanka — The United States will sponsor a resolution on Sri Lanka next month at the United Nations Human Rights Council backing Colombo’s plans for reconciliation and to conduct an investigation into possible war crimes during the final stages of the island’s civil war, a top American diplomat said Wednesday.

The announcement signals a reversal of Washington’s longstanding insistence on an international inquiry. Since 2012, the United States has sponsored three resolutions — all adopted — demanding accountability from Sri Lanka’s government. In March 2014, the rights council approved the opening of a United Nations investigation into allegations of war crimes by both the Sri Lankan government and the Tamil Tiger rebels in the last seven years of the 26-year war, which ended in 2009. The report on that inquiry is due at the rights council’s session in Geneva next month.

Nisha Biswal, assistant secretary of state for Central and South Asian affairs, made the announcement after a two-day visit to Sri Lanka for talks with the new government that was reinstalled in parliamentary elections this month.

She said that a credible domestic inquiry would render a more “durable outcome” and that the United States sensed new hope for reconciliation with the island’s Tamil minority.

Ties between Colombo and Washington grew strained during the tenure of President Mahinda Rajapaksa, who resisted international pressure to investigate war crimes allegations and suffered a surprise defeat in an election in January election. Tom Malinowski, assistant secretary of state for democracy, human rights and labor, who accompanied Ms. Biswal on the visit, said the new government’s approach under President Maithripala Sirisena had been to defend the country’s interests without being defensive.

“The government has reached out, it has listened, it has engaged in dialogue with everybody,” Mr. Malinowski said. “It has acknowledged the need of truth-telling and accountability. In doing that, it has won a tremendous amount of trust and confidence.”

He said trust in the new government was encouraging the international community to give Sri Lanka the time and space it requires to deal with “difficult issues” of its past.

Ms. Biswal said, “We are incredibly proud of the journey that is being undertaken here; the story that is unfolding in this great country is one that stands as a testament to the rest of the world.”

The American delegation met with Mr. Sirisena, Prime Minister Ranil Wickremesinghe and leaders of the Tamil National Alliance, the main Tamil party, during the visit.

@ The New York Times