Hong Kong regulator SFC orders trading suspension for Lerado

PUBLISHED : Tuesday, 06 June, 2017, 11:22am
UPDATED : Tuesday, 06 June, 2017, 10:51pm

Hong Kong’s Securities and Futures Commission ordered Lerado Financial Group Company to suspend trading on Tuesday after the regulator alleged the company gave misleading information in an announcement in 2015, Lerado said in a stock exchange filing.

The company will not proceed with its proposed rights issue plan until it reaches a resolution with the SFC, Lerado chairman Mak Kwong-yiu said in the statement. In March the company proposed a rights issue to raise HK$460.64 million.

The regulator said the action was taken after it found Lerado had given “materially false, incomplete or misleading information” in a circular dated October 26, 2015 about an open offer.

The shares suspension order is “in the interest of the investing public”, the company cited the SFC as saying.

Lerado is involved in financial services, stock broking and manufacturing of children’s plastic toys. It has been listed since 1998 and has a current market capitalisation of HK$322 million. It reported a net loss of HK$246.46 million in 2016.

Before the suspension, Lerado last traded 12.7 HK cents, down 9.3 per cent.

In Hong Kong, listed companies usually voluntarily suspend trading. The SFC rarely issues suspension orders unless it deems it necessary to protect the interest of investors.

SFC chairman Carlson Tong Ka-shing told the South China Morning Post in an interview last week that the regulator has stepped up enforcement action in recent months in a bid to ensure investor protection and achieve an orderly market.

Hong Kong should add global stocks for mainland investors to trade, SFC’s Tong says

Lerado said it will make representations to the SFC in respect to the suspension decision.

“The board is now seeking proper legal advice on the SFC letter and will make further announcements as and when required in accordance with the listing rules,” said Mak.

In February, the SFC used the same rule to direct the Hong Kong stock exchange to suspend trading in shares of newly listed Growth Enterprise Market stock GME Group Holdings, after the company’s share price rose five fold in the morning after its trading debut.

The SFC and the Hong Kong Exchanges and Clearing last month jointly issued guidelines on the Growth Enterprise Market, urging issuers and investment banks to ensure their placements were “fair and orderly” to avoid high volatility in trading.

An SFC spokesman declined to comment on the suspension order on Lerado.