Hong Kong Police Make Third Arrest in China Metal Probe

Hong Kong’s police arrested a third person related to the investigation into China Metal Recycling Holdings Ltd., the company that the city’s securities regulator accused of fabricating sales.

A 37 year-old man surnamed Fung was arrested yesterday morning, according to a police statement dated July 30. Two people were arrested on July 26 in connection with the case and both are currently on bail, an earlier police statement said. It identified the two as a 46 year-old man surnamed Lam and a 42 year-old woman surnamed Lai.

A woman who answered the phone at China Metal’s office said the company had no comment. Alan Fung, the company’s group finance director, didn’t immediately respond to an e-mail.

The Securities and Futures Commission is seeking to liquidate the Hong Kong-based scrap metal dealer after it found evidence that the company inflated the size of its business to gain a listing in 2009. China Metal adds to a series of accounting scandals at Chinese companies that is prompting regulators to toughen enforcement and share-sale rules.

The court will hear the case on Aug. 2 on the continuation of appointment of provisional liquidators, where China Metal will have the chance to address the allegations, the SFC said in a July 29 statement.

The case is Securities and Futures Commission and China Metal Recycling Holdings Limited, HCCW 210/2013, Hong Kong’s Court of First Instance.

(Police correct name of person arrested in second paragraph in story published July 31.)
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