Investors claim 2.7m yuan from misleading company
Updated: 2007-12-27 09:18
HANGZHOU -- 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 February 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 February 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 February 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 November 12 from its all-time high of 31.58 yuan.
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