Two Chinese technology companies announced on Tuesday that they are being investigated by the securities watchdog for possible violations of the Securities Law.

Announcements by Hundsun Technologies and Hithink RoyalFlush Information Network Co. came after the China Securities Regulatory Commission announced it had found signs of margin financing through unofficial channels in July.

The widespread use of leverage, a practice of using borrowed money to buy shares, is blamed for some of the volatility in the stock market.

On July 27, the Shanghai Composite Index plunged 8.48 percent to close at 3,725.56 points, in the sharpest daily drop since Feb. 27, 2007.

Hundsun's HOMS service of Hundsun, designed for small assets managers, is said to have been used by investors for margin financing outside approved channels. Hundsun replied by saying HOMS is just a "technical tool" for private funds.

Hithink RoyalFlush said on Tuesday that it has suspended the operation of all asset management software and closed all accounts on the program on Aug. 14.