Hong Kong’s stock watchdog took the rare step of saying trading in Hanergy Thin Film Power Group Ltd (漢能薄膜發電集團) shares cannot resume without its approval, raising the prospect they will remain suspended for the foreseeable future.
The Hong Kong Securities & Futures Commission’s (SFC) suspension falls under a rule allowing it to call for a halt when it believes that misleading, false or incomplete information has been included in documents and statements. Regulators were already investigating Hanergy, which has not traded since it requested a halt on May 20 after its shares lost almost half their value in less than half an hour.
“It’s pretty unusual; I have never come across a case like this before” said Eric Seto, a partner at Morley, Chow, Seto Solicitors, who has worked on SFC criminal prosecution cases. “I think this is just the first step in what will become a criminal prosecution.”
Liu Yanjun (劉燕君), a public relations manager at Hanergy Thin Film’s Beijing-based parent, Hanergy Holding Group Ltd (漢能控股), declined to comment.
Hanergy originally asked for a trading suspension after a 24-minute, 47 percent price plunge wiped US$19 billion from its market value. A week later, the commission took the unusual step of announcing it had been investigating the company.
Seto said that if the company is found guilty of providing misleading information to the commission, it could be fined a maximum of HK$1 million (US$130,000) and its chairman, Li Hejun (李河君), could face a possible two-year prison sentence.
In the handful of other cases where the commission has ordered share suspensions, the consequences have been serious.
In March 2010, it ordered a halt to trading of Hontex International Holdings Co (洪良國際控股), which was eventually delisted after the regulator accused it of misleading investors in its listing prospectus.
In December 2013, trading of Qunxing Paper Holdings Co (群星紙業控股) shares were halted by the commission, which subsequently froze the company’s assets. The stock remains suspended.
For Hanergy, although Hong Kong stock exchange trading remains suspended, at least 4.9 billion shares have changed hands over the counter since May 20. According to a report on Tuesday by the Central Clearing and Settlement System, Standard Chartered Bank PLC’s brokerage arm sold more than 3 million shares, while JPMorgan Chase & Co acquired 12.5 million shares.
Guggenheim Partners LLC confirmed earlier this month that it had found a buyer for its exchange traded funds’ holdings in Hanergy.
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