An east China court by Wednesday has received 51 lawsuits
claiming 2.7 million yuan (US$360,000) of compensation for losses
they suffered from a Shanghai-listed construction company which
released false information early this year.
The Hangzhou Intermediate People's Court, in coastal Zhejiang
Province, said they had received a total of 51 petitions by
investors from around the country. The suitors had bought the
shares of the Shanghai-listed Hangxiao Steel Structure and then
lost money.
They started to sue the company after China's securities
watchdog penalized the company in late April for releasing
misleading financial information. Their lawsuits were based on the
written notice of administrative penalty, media reports and the
dramatically fluctuated share prices, said the court.
The company announced on Feb. 15 that it was in talks with a
partner on a 30 billion yuan overseas construction project. It
formally disclosed on March 13 that it had signed contracts worth
34.4 billion yuan (US$4.4 billion) with the Hong Kong-based China
International Fund Ltd. to supply products and services for public
housing projects in Angola.
Company chairman Shan Yinmu was also accused of dropping hints
about the deal at a company meeting on Feb. 12, suggesting company
sales were expected to surge to 12 billion yuan in 2007 from 1.5
billion yuan in 2005.
The firm announced on April 30 that its sales totaled 437.1
million yuan in the first quarter of the year.
The share price of the firm, which opened at 4.24 yuan on Feb.
12, began to rise sharply -- frequently hitting the daily limit of
10 percent and septupled in 4 months -- until April 2 when the
China Securities Regulatory Commission (CSRC) launched an
investigation into the suspected stock price rigging.
On April 30, CSRC fined the Shanghai-listed company 400,000 yuan
(US$52,000).
Shan Yinmu and company president Zhou Jinfa were issued warnings
and each fined 200,000 yuan (US$26,000). Three others -- board
secretary Pan Jinshui, general manager Lu Yongjun, and securities
representative Luo Gaofeng -- were each fined 100,000 yuan.
The CSRC said the company had failed to follow legal procedures
concerning the release of financial information and had seriously
underestimated risks.
The company's share prices had slumped to 13.28 yuan on Nov. 12
from its all-time high of 31.58 yuan.
(Xinhua News Agency December 27, 2007)
