An individual investor is the first of what could be many to
file a lawsuit against senior management of a listed construction
company for issuing misleading statements.
The investor, surnamed Yin, has accused management at Hangxiao
Steel, a Shanghai-listed construction company whose share prices
has jumped almost 8 times this year, of violating information
disclosure rules. Yin has demanded compensation for the 15,244.88
yuan she lost.
Misleading statements made by four indicted senior managers
caused her to misjudge the company's performance and value, Yin
said in her litigation.
The accused senior managers include the chairman, a board
member, general manager and security representative.
Hangzhou Intermediary has accepted the case, according to
reports at Oriental Morning Post. But a Hangxiao
spokesperson said the company has not received any court
notice.
The previously little-known Hangxiao has shot to stock market
fame recently after its shares leaped 8 times this year.
China Securities Regulatory Commission fined Hangxiao 400,000
yuan, and fined its Chairman Shan Yinmu and President Zhou Jinfa
200,000 yuan each, and three other officials 100,000 each, for
failing to disclose information timely.
Hangxiao is the first case involving illegal information
disclosure since the listed company information release management
rule took effect on January 30.
Hangxiao Steel's shares surged by the daily limit of 10 percent
for 10 straight days ending on March 16.
The company announced on March 13 that it had signed a
construction contract in Angola worth 34.4 billion yuan.
Trading of company shares was halted for 10 days beginning on
March 19, after Hangxiao was accused of manipulating stock prices
by announcing it had grabbed an enormous contract in Africa.
"The company failed to disclose orders from Angola in newspapers
or tell investors about the transaction in due time," Hangxiao
Steel said in a statement on May 14.
"Comments made by company officials relating to the probe were
misleading," the company said in a statement to the Shanghai Stock
Exchange at the time.
Yin's suit against senior management is likely to be followed by
a wave of other suits from angry investors.
According to a local newspaper report, more than 200 individual
investors across the country who lost their money investing in
Hangxiao's stock have expressed the intention to sue.
Hangxiao shares closed at 27.83 yuan yesterday, down 6.77
percent.
(China Daily May 29, 2007)