CHINA Assets (Holdings) board of directors has given company chairman Lao Yuan-yi a vote of confidence even though he faces civil fraud actions in the United States. The board of the Hong Kong-listed direct investment fund announced that the case brought against Mr Lao by the Commodity Futures Trading Commission (CFTC) would have no impact on his role as chairman of China Assets. 'The board is satisfied that Mr Lao has the character, experience and integrity to continue to act as a director and to discharge his duties in accordance with the standards, skill, care and diligence required of directors . . . under the rules governing the listing of securities on the stock exchange,' director Frank Tsui said in a statement yesterday. The CFTC holds Mr Lao responsible, as a director of New York-based Standard Forex Inc in 1992, for the company's alleged violations of the Commodity Exchange Act at that time. At a China Assets board meeting on June 7, Mr Lao explained that he has filed a defence denying any wrongdoing. His lawyers are preparing a motion, which is expected to be filed in October, arguing that Mr Lao was not a 'controlling person' in Standard Forex despite his position as a director. The motion will point out that under a shareholders' agreement, the Standard Forex's management was exclusively in the hands of Pundi-Forsten International of Hong Kong. Mr Lao will also portray himself as a passive investor representing the interests of China Venturetech Management Inc. If the motion succeeds, the charges against Mr Lao will be dismissed. But the motion is not expected to be filed until October because the defence will probably not complete its examination of the evidence, obtained under discovery, until August 31. The court will probably not decide the motion before the end of this year. Mr Lao would only face a court trial if the motion were denied. China Venturetech Investment Corp owns half of Standard Forex through China Venturetech Management. China Venturetech holds an estimated 10.67 per cent stake in China Assets (Holdings) and a 51 per cent stake in China Assets Management. Standard Forex is not associated with China Assets (Holdings). Seven out of 11 defendants have settled with the CFTC, but Mr Lao is still fighting the case. The CFTC charges that Standard Forex failed to comply with registration requirements and misled customers about the risks of futures trading. Mr Lao is personally accused of participating. The CFTC would like a permanent injunction barring Mr Lao and the other defendants in the case from further violating the Commodity Exchange Act. It also seeks to account for and collect any money the defendants received as a result of their alleged violations. Mr Lao and other defendants in the case have been banned from engaging in futures trading in the US since a US court issued a preliminary injunction on August 9, 1993. Mr Lao agreed at the meeting to give the China Assets board monthly updates about the case so the matter could be reviewed if necessary. Mr Lao is also a director of First Shanghai Investments and a founder of one of the first of the new wave of China enterprises, China Venturetech International Corporation.
