The spokesman told China Daily that none of its staff members had ever been asked to assist the year-long probe into the insider trading case.

The Guangdong public security bureau declined comment at this stage.

Related readings:  Firms guilty of share graft  Securities industry to open up  Crack down on insider trading Find more in Markets Watch

The China Securities Regulatory Commission (CSRC) has sent penalty notices to Shenzhen-listed Yan Bian Highway Construction Co Ltd and Jilin Aodong Medicine Industry Group Co Ltd for failing to disclose timely and accurate information about their ties to Guangfa Securities.

The securities watchdog cited evidence of insider trading and other forms of financial crimes following a year-long investigation into Guangfa's attempt to seek a backdoor listing by buying into Yan Bian.

On June 1, Guangfa CEO Gao Zhengqing stepped down from his post and admitted his brother owned Yan Bian shares, but he denied that he ever leaked any insider information to his brother.

Shares of Yan Bian and its biggest shareholder, Jilin Aodong, inexplicably rose from March 2006 for two months, after which Yan Bian announced that Guangfa was seeking to be listed by buying into Yan Bian.

(For more biz stories, please visit Industry Updates)