New | Hong Kong regulator confirms probe into Hanergy despite boss' denial
The securities regulator yon Thursday confirmed it is investigating Hanergy Thin Film Power Group, hours after chairman Li Hejun dismissed rumours of a probe.
"The SFC wishes to clarify that a formal investigation into the affairs of Hanergy has been active and is continuing," the Securities and Futures Commission said in response to reports of a regulatory probe into alleged market manipulation.
Hanergy shares have been suspended from trading since May 20 after the stock plunged 47 per cent in the morning that day to HK$3.91.
Hanergy did not reply to inquiries from the on Thursday.
The SFC's statement came after a video interview of Li with Xinhua was posted online on Wednesday.
"This is purely rumour, it's impossible," Li said in the interview, responding to a question about a probe by the SFC.
He would be the first to know had the firm been under investigation, said the man who in February was named the mainland China's richest person. "But I have no knowledge about that," he said.
Media reports have long cast doubt on the sustainability of Hanergy's business model, with some suggesting its shares were manipulated.
None of these reports, however, interrupted the stock's meteoric rise as it surged 664 per cent in the 12 months before its crash and suspension.
Corporate governance activist and deputy chairman of the SFC's takeovers and mergers panel, David Webb, said the SFC's investigation could be looking at Hanergy's corporate affairs as the announcement made no mention of any investigation into its share transactions.
According to regulatory filings, Li had in the past six months more than doubled his short position in his company's shares.
The filings showed Li had increased his short position by 123 per cent since December last year to 7.71 per cent of Hanergy's issued capital.
Webb this month filed a complaint with the SFC, pointing out that Hanergy did not make an announcement on a stake purchase by the State Administration of Foreign Exchange's investment unit, which it disclosed only in an advertisement. "It's pretty unsurprising [the SFC investigation]. I was not the only person to have made complaints," he said.
In the Xinhua interview, Li said Hanergy's financial condition was sound and that it was not behind in interest payments or loan repayments to any bank.
He also said all of the company's plants were operating normally.
"Hanergy is in its best time in history," he said, adding the company had entered "a rapid and sustainable growth period".