Shares of Shanghai-listed New Huangpu Real Estate, one of the city's largest property developers, fell 2.33 per cent amid reports that the head of its major shareholder was arrested for alleged rule violation in a share sale and involvement in a widening scandal related to the city's pension fund.
The stock shed 12 fen to close at 5.02 yuan yesterday. It fell as much as 4.5 per cent in the morning.
Wu Minglie, president of New Huangpu Group, was arrested by the central government's supervision arm on September 1 for allegedly breaching rules during the sale New Huangpu Real Estate shares, the Caijing Magazine said. New Huangpu is the third-largest shareholder of the listed firm.
The Shanghai Securities News also reported Mr Wu might be involved in illegal use of the city's pension fund that had brought several prominent businessmen and officials under investigation.
New Huangpu Real Estate said it would issue an announcement regarding Mr Wu's arrest but declined to give details. A spokesman for the Shanghai government and Huangpu district government said they were not aware of the arrest.
The Shanghai government's pension fund management arm is suing two companies controlled by Zhang Rongkun, Shanghai Electric Group's former director, to recover about 3.45 billion yuan.