(Yicai Global) Nov. 25 -- Southwestern China's Chongqing has exposed a shadow margin financing case involving as much as CNY55 billion (USD8.4 billion) in illegal transactions.

A local company that operated lending platforms has been closed and the suspects who gained CNY12 million (USD1.8 million) detained, Securities Times reported yesterday.

After shady margin financing platforms caused China's mainland stock indexes to tumble in mid-2015, regulators have sought to bring the field under tight control with only a few selected brokerages permitted to serve such risk-tolerant borrowers.

The Chongqing company's platforms offered leverage that could go as high as eight times the deposit with the purpose of trading securities. But they also collected monthly management fees of 2 percent with each transaction costing 1.5 percent.

The firm had hired nearly 350 agents in 16 regions, including Sichuan and Guangdong provinces, as well as Shanghai, and boasted more than 40,000 registered users. The platforms had earned CNY280 million (USD42.6 million).

Editor: Emmi Laine