Can Hong Kong’s regulator help out-of-pocket shareholders collect on Qunxing’s fraud penalty?
Qunxing Paper Holdings was ordered to pay HK$1.42 billion to 27,000 investors for fraud, but the company has only HK$112 million of assets in Hong Kong.
Qunxing Paper Holdings, a Chinese printing company that was kicked off the Hong Kong stock exchange last year for fraud, has been ordered to compensate the 27,000 investors who have invested in it since its 2007 initial public offering, closing the final chapter in the company’s decade-long journey from boom to bust.
The wallpaper printer, based in Bingzhou city in Shandong province, must pay HK$1.42 billion (US$181.6 million) to shareholders because it had misled them with false financial information, according to Hong Kong’s Securities and Futures Commission, citing a verdict by the Court of First Instance.
Qunxing’s founder and former chairman Zhu Yuguo, and his son Zhu Moqun, as well as a subsidiary called Best Known Group were found to have disclosed false or misleading information in Qunxing’s 2007 stock offer prospectus, as well as overstating its turnover while understating its debts in the company’s earnings announcements from 2007 to 2011, according to the regulator.
The court also instructed Qunxing to pay Victory Asset Management, which bought 206.56 million unlisted warrants of the company in January 2011. Bruno Arboit of Zolfo Cooper was appointed to administer the payout.
