• Fri
  • Sep 19, 2014
  • Updated: 5:34am
NewsHong Kong
COURTS

Regulators seek to freeze HK$1b of Gu Chujun's Kelon shares

PUBLISHED : Sunday, 22 June, 2014, 4:30am
UPDATED : Sunday, 22 June, 2014, 4:30am
 

Hong Kong regulators are seeking to freeze almost HK$1 billion worth of shares owned by a disgraced mainland tycoon to compensate investors who lost out when his company was delisted.

The Securities and Futures Commission (SFC) is seeking a High Court injunction to prevent Gu Chujun selling more than 107 million shares in Hong Kong-listed Hisense Kelon Electrical Company. The company's shares were trading at HK$9.330 on Friday, putting the value of Gu's stake at close to HK$1 billion.

Gu was sentenced to 10 years in prison on the mainland for embezzlement and false accounting in relation to Kelon, which makes home appliances.

The SFC writ, filed last week, relates to Greencool Technology, which was listed on the Hong Kong bourse from 2000 to 2005. The company's shares were suspended from trading in 2005 and delisted in 2007.

"Many members of the investing public purchased or acquired shares in Greencool and either sold them at a loss or held them until suspension of trading and the eventual delisting of Greencool and suffered loss," the SFC said in the writ.

"The [SFC] is entitled to an order under the [Securities and Futures Ordinance] requiring [Gu] to pay damages to any person who has suffered loss as a result of [trading] in the shares of Greencool at the relevant time."

Gu founded Greencool, which manufactured environmentally friendly air-conditioning systems and refrigerators, in the early 1990s.

Gu was once one of the mainland's most flamboyant tycoons, controlling five public companies - Greencool, Kelon, Hefei Meiling, Xiangyang Automobile Bearing and Yangzhou Yaxing Motor Coach.

He was arrested in 2005 and jailed in 2008, when he was also fined 6.8 million yuan and ordered to repay the 165 million yuan he embezzled from the company.

The China Securities Regulatory Commission fined Gu 300,000 yuan in 2006 for a string of improper corporate activities.

The writ says Gu, as chairman of Greencool, made inflated claims about Greencool's bank deposits and concealed its debts from the SFC.

Its annual accounts overstated its financial position by between 486 million yuan and one billion yuan during the five years it was listed.

The SFC claimed that Gu continued to own more than 107 million shares in Kelon via Hong Kong brokerage firms.

They asked the court to stop Gu from trading the shares so that the investors could make claims against him.

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