Breaking News

Google Quarterly Earnings Per Share of $6.27 Miss Estimates; Shares Slump
Tweet TWEET

Hong Kong Regulator Accuses Hontex of Preparing Misleading IPO Prospectus

Hong Kong’s Securities and Futures Commission said Hontex International Holdings Co., a Chinese fabric maker that raised almost HK$1 billion ($129 million) in a share sale last year, included false information in its prospectus.

“Hontex is alleged to have disclosed materially false or misleading information in its prospectus dated 14 December 2009, which was likely to have induced investors to subscribe for the Hontex shares,” the securities regulator said in a statement today. “Hontex’s financial position as outlined in its IPO prospectus has been materially overstated.”

The SFC has taken legal action against Hontex seeking to have money from the IPO returned to investors. The company’s shares have been suspended from trading since March 30.

In a separate action, Hong Kong’s Independent Commission Against Corruption charged a senior manager of accounting firm KPMG today in relation to the IPO prospectus, according to a press release on the commission’s Web site.

Leung Sze-Chit allegedly offered a HK$100,000 bribe to his subordinate “as a reward for preparing the accountant’s report in the prospectus for the global offering of Hontex,” the ICAC statement said.

KPMG said today in a statement it discovered the alleged payment internally and reported it to authorities. KPMG said it had suspended an employee, whom it did not identify.

SFC spokesman Jonathan Li declined to elaborate on the alleged discrepancies in the Hontex prospectus or to say how they were discovered, citing a pending court case.

Calls to the Hong Kong office of Hontex went unanswered.

Asset Freeze

The High Court today ordered a continued freeze on the assets and funds up to HK$1 billion raised from the initial public offering of Hontex. The court also stopped Hontex from moving funds out of Hong Kong and ordered a receiver to be appointed after the SFC filed a complaint March 30 saying the Hontex IPO had violated its rules.

Hontex shares closed March 29 at HK$2.06, having fallen 4.2% from their IPO price of HK$2.15. The shares began trading Dec. 24.

The case is HCMP630/2010 in the Hong Kong High Court’s Court of First Instance.

To contact the reporter on this story: Debra Mao in Hong Kong at dmao5@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.