Follow @SCMP_News Police last night arrested a fourth suspect - a 60-year-old man - in the investigation into the failure of the Hong Kong Mercantile Exchange (HKMEx). The latest arrest follows the detention of three suspects on Tuesday in a case that has shocked the city's business and political establishment and involves a key political ally of Chief Executive Leung Chun-ying. On Tuesday the police commercial crime unit investigating the case arrested two men for possessing false documents and another for "using a false instrument". Further arrests are expected. A source familiar with the case said last night that the case was triggered by a bounced cheque that had led to the closure of the HKMEx, which was founded by executive councillor Barry Cheung Chun-yuen in 2008. After the case came to light Cheung, 54, surrendered the HKMEx's trading licence on Saturday and later said he would take immediate leave of absence from Exco and all his public duties. He has said he had no intention of folding the company. Cheung's involvement in the case is unclear. The source said a probe into HKMEx by the Securities and Futures Commission (SFC ) was not triggered by complaints or accounting problems. Instead, the SFC began to scrutinise the HKMEx earlier this month after a cheque in favour of the exchange's account with an undisclosed bank had bounced. The setback came when HKMEx was seeking potential investors to help keep it out of financial trouble. Cheung said yesterday the three suspects first arrested were not HKMEx staff "in the past or at present". This was verified by an independent third party. It is also understood that the three initial suspects were not the company's directors or commissioned accountants. It is not clear who wrote the bounced cheque and for how much it was worth. Under its licence requirement, the HKMEx needs to have sufficient cash flow to guarantee its operations for nine months, and needs to prove this to the SFC regularly. After the cheque was returned, no other money was injected into the HKMEx's account and it could no longer meet the SFC's cash-flow requirement. The SFC, which was monitoring the HKMEx's finances, began its official investigation into the exchange on May 15, after finding that its finances were deteriorating. It passed the case to police after discovering what it suspects are serious irregularities. Cheung, who spoke to the media yesterday, would not disclose more details. He said he remained the major shareholder of the company that controls the HKMEx and denied a rumour police had searched his home. Cheung insisted that, for now, he did not need to resign from any public posts - among many other roles, he is chairman of the Urban Renewal Authority - despite mounting pressure. "If it is necessary I will [resign] immediately," he said. "This is a private enterprise situation [...] It will not have any influence on the government's credibility."