HK Commercial Crime Bureau is believed to have started investigating the company China Metal Recycling for allegedly faking its balance sheet

(773) China Metal Recycling:
Apple Daily reported that HK Police arrested 2 individuals related to China Metal Recycling last Friday, and the Commercial Crime Bureau is believed to have started investigating the company for allegedly faking its balance sheet. Officers visited the company’s offices in Central on Friday and Saturday, taking away documents.
(773 HK) @ HK$: market cap. US$0.0m, daily liquidity US$0.0m. Broker forecasts:  buys,  holds,  sells, 0.0x current year P/E, 0.0% yield.

(773) China Metal Recycling: SFC has presented a petition to the Court of First Instance to wind up China Metal Recycling (Holdings) Limited. These applications follow an SFC investigation that found evidence suggesting that China Metal Recycling has overstated its financial position in the prospectus used for its initial public offering in 2009 and in its annual report for 2009. The SFC alleges that this was achieved by inflating the size of the company’s business and the amount of revenue generated by its major subsidiary. The SFC alleges that an overwhelming majority of the subsidiary’s purported purchases from its three major suppliers for the financial years ended 31 December 2007, 2008 and 2009 were fictitious by escalating amounts in each successive year. The SFC’s investigation also found evidence showing that the suspected exaggeration of China Metal Recycling’s financial situation remains a current issue that would affect its 2012 financial results, which to date remain unissued . China Metal Recycling said an order was granted by the High Court of the Hong Kong Special Administrative Region on 26 July 2013 appointing Cosimo Borrelli and Chi Lai Man Jocelyn, both of Borrelli Walsh Limited, as provisional liquidators to Chin a Metal Recycling on the application of the SFC. In response to the SFC’s file, the single largest shareholder of the company, Wellrun Limited expressed objection, saying that the act does not meet the interests of shareholders. The Company has arranged legal counsel to follow the issue.

Two nabbed as SFC says China Metal lied
Victor Cheung
Tuesday, July 30, 2013
Hong Kong police is understood to have arrested two individuals related to China Metal Recycling (0773) on Friday, it was learned last night. The Commercial Crime Bureau is believed to have started investigating the company on Friday for allegedly faking its balance sheet. Officers visited the company’s offices in Central on Friday and Saturday, taking away documents. One of the individuals arrested is a 46-year old man surnamed Lam and another is a 42-year old woman surnamed Lai. Both are locals and currently on bail. The Securities and Futures Commission, which is seeking to liquidate China Metal Recycling, yesterday accused the firm of inflating the size of its business and revenue before listing in 2009. The regulator, which applied on Friday to wind up the listed firm under the Securities and Futures Ordinance in a first, said China Metal had overstated its financial position in the prospectus used for its June 2009 initial public offering that raised HK$1.55 billion. An “overwhelming majority” of purported purchases by one of the firm’s subsidiaries from its three major suppliers for 2007-09, were “fictitious by escalating amounts in each successive year,” the SFC alleged. With the court granting orders to appoint Borrelli Walsh as provisional liquidators, the board of directors will be suspended. The court would void any disposition of the firm’s property and any share transfers. The matter will return to the court for a hearing on Friday. China Metal chairman and major shareholder Chun Chi-wai yesterday objected to the winding up, saying the move would not be beneficial for shareholders. The Guangzhou-based firm’s shares have been suspended since January 28 after shortseller Glaucus Research made allegations against it. Just three days before, Chun signed a deal to sell 29 percent of the state-owned firm for HK$3.4 billion. Deloitte, the auditor for China Metal, said there is no suggestion of any fault on its part.

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