Chaoda Modern Agriculture Holdings Ltd., the Chinese food producer defending a claim from Next Magazine that it overstated its land holdings, is the subject of a Hong Kong government market misconduct lawsuit.
Hong Kong’s Financial Secretary initiated proceedings against the company in the city’s Market Misconduct Tribunal, according to government spokeswoman Shirley Wong. Tribunal secretary William Chow declined to elaborate on the specific allegations or people involved.
The city’s Market Misconduct Tribunal hears civil cases involving stock market manipulation, false trading, insider trading and three other offenses. The tribunal can order the disgorgement of profits gained or loss avoided as a result of misconduct, and can bar individuals from being corporate directors, according to its website.
Chaoda spokesman Simon Shi said he hadn’t heard about the proceedings and wasn’t immediately able to comment.
Chaoda shares have fallen 59 percent as of 10 a.m. today since May 26, when Next Magazine reported the company exaggerated the size of its farmland. The company said in a June 3 exchange filing the allegations were false.