The problems are so serious that regulators have finally decided to step in. Probes started last week into firms whose shares sprinted before price-sensitive news was unveiled publicly while more rules are in the pipeline to battle against insider trading.

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China's benchmark Shanghai Composite Index, which soared 130 percent last year, adopted a seesaw pattern in the first few months of this year as people pocketed gains after analysts warned them against market bubbles.

As the broad rally seemingly comes to an end, some market participants are struggling to stoke up sentiment through digging out companies with possible "positive themes" such as asset-injection plans or take-over transactions.

A majority of the so-called "secret information" posted on the bulletin boards of financial Websites proved to be wrong, plaguing stocks involved with big ups and downs and leaving credulous investors high and dry.

For firms with real stimulus information, investors often surprisingly found that their stock prices had risen by leaps and bounds ahead of official disclosures, and even before market talks circulated.

"Regulators deemed it important to keep the market steady and prevent investor unrest due to resurgent stock-related misbehavior," said a Shanghai-based source close to the watchdog.

"They were serious about the probes and would severely punish people responsible for misconduct with measures to even ban them from entering the stock market for life."

Mainland stock regulators last week launched an investigation into suspected insider trading involving Hangxiao Steel Structure Co, whose stocks soared by daily limits for six sessions in a row before the disclosure of a huge contract.

Although Hangxiao said its huge contract to build housing projects in Angola is authentic, doubts were mounting if anyone benefited from getting the news early and buying the firm's shares.

Xinhua news agency, citing an insider, reported on Thursday that Hangxiao's Chairman Shan Yinmu had said at the firm's annual conference in February that sales were expected to surge to 12 billion yuan (US$1.55 billion) if it managed to sign huge overseas contracts.

A similar probe has begun into GF Securities Co's proposed takeover of Shenzhen-listed Yan Bian Highway Construction Co for a back-door listing, the Caijing Magazine said on Wednesday.

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