The Shanghai city government has received no reports of companies based in the free trade zone being investigated for manipulating stock futures prices, despite media reports to the contrary.

“We’ve noticed foreign media reports claiming that companies in Shanghai’s free trade zone were involved in stock futures manipulation investigations,” government spokesman Xu Wei told a briefing yesterday.

“No such cases have been reported to the authorities,” he said.

Chinese police said on July 9 that they had begun an investigation into allegations of price manipulation regarding stock futures, but gave no indication of the focus of the probe.

Xu’s comments might have been a reference to a Bloomberg News report released on Tuesday that cited unidentified sources as saying Chinese authorities were investigating companies in the FTZ following allegations they had exploited looser policy controls to manipulate the stock market.

The unnamed companies might have fabricated cross-border trades as a foil for moving capital into and out of China, the sources were quoted as saying.

The report said also that the investigation had not been made public.

Xu said authorities in the FTZ adhere to a “prudent management system” and use strict anti-money laundry mechanisms to monitor all fund flow of all funds related to trade, investment and finance.

In the event of evidence being found to suggest a Shanghai firm was involved in nefarious activities, the city government would work closely with state authorities in the pursuit of justice, he said.

The police investigation came after the stock market fell 35 percent from its mid-June high, wiping 25 trillion yuan (US$4 trillion) off the value of shares.