Money managers now can't single out any domestically listed company when promoting their products to individual investors. Previously, new funds usually disclosed a raft of chips they intended to buy after their initial sales during meetings with investors.

In addition, fund firms are now required by the regulator not to comment freely on stockmarket performance when contacted by the media. "Authorities have ordered us not to give detailed advice on stock investments and everyone is now cautious about answering questions from newspapers, TVs and radios," said a Shanghai-based fund source.

Regulatory jitters were caused by the belief that retail investors may pile into chips recommended by fund managers without looking properly at their valuation, the source said. They may suffer later when institutions start to trim positions to pocket profits.

Tighter scrutiny will be placed on sales and investment procedures for future mutual funds to weed out irregularities, battle against market volatility, and protect investors' interest, the sources said.

"One of the regulatory concerns is that fund managers might ride the stock boom to seek profits for themselves and their relatives," said a second fund executive based in Shenzhen. "We are required by the watchdog to set up a firewall to prevent such misconduct."

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