WEB NEWS Investor Alert
HONG KONG (Dow Jones)--The Hong Kong government said Wednesday it charged two senior executives of embattled Chinese fruit and vegetable producer Chaoda Modern Agriculture (Holdings) Ltd. (0682.HK ), as well as a portfolio manager at U.S.-based Fidelity Management & Research Company, with insider dealing.
The allegations add to a host of others brought against Chaoda, including a May report by Chinese-language Next Magazine alleging the company has overstated the size of its farmland holdings in China, and a Monday report by an offshoot of hacker group Anonymous that accuses the company of fraud.
Chaoda has denied Next's report, and a representative of the company said Wednesday it was preparing responses to both the report from Anonymous Analytics and to the Hong Kong government charges.
A filing to the Market Misconduct Tribunal, which only hears civil cases, alleges Fidelity's George Stairs used inside information from Chaoda Chairman Kwok Ho and Chief Financial Officer Andy Chan to trade the company's shares before and after a HK$1.785 billion (US$229.0 million) share placement in June 2009.
The document alleges Stairs sold HK$1.98 million worth of Chaoda shares at HK$5.30 each before the placement and bought HK$2.90 million worth of shares at HK$4.60 each after the placement, while acting on insider information from Kwok and Chan that they knew was likely to negatively affect Chaoda's share price.
Trade in Chaoda's shares has been suspended since 0530 GMT Monday following media reports the local government was investigating it for market misconduct, sending its shares tumbling 27% to HK$1.10. Its shares have lost 81% so far this year.
3rd Party Alerts & Research
It has come to our attention that an independent report documenting an investigation into Chaoda Modern Agriculture (CMGHY.PK) has been completed by Anonymous Analytics. This report addresses allegations of fraud on several matters.
Research Piece Introduction:
Recently, our representatives traveled to Hong Kong to meet with executives of Chaoda Modern Agriculture, one of China's largest agricultural companies. Chaoda places itself as a leader in farming and agricultural innovation. At the meeting, management showed us how fast the Company was growing. They told us how many production bases they operated. They told us about their involvement in the 2008 Beijing Olympics, about all the awards they had won. Phrases like 'state level dragon head leading enterprise' and 'most valuable brand in China' were peppered throughout the meeting. We left with books, pamphlets, and CDs full of marketing material and notes.
But it wasn�t their marketing material that caught our attention. It wasn�t that this company was chosen as the official vegetable caterer to the 2008 Beijing Olympics. It wasn't that Chaoda had been ranked as one of the most valuable companies in China. It was their numbers, which were eye-popping. This once small company had managed to redefine the farming model, and in the process, grown to one of the biggest, most lucrative agricultural companies in the world � a company that Credit Suisse hailed as �revolutionary�. We shook hands and left the meeting with the impression that Chaoda was either one of the greatest companies we had ever witnessed, or a large-scale fraud. We will be following up with complete details soon.
Summary Bullets Please see entire report.
Disclosure :
GeoInvesting has no affiliation with Anonymous Analytics in any way, nor has it vetted this information in any way. The GeoTeam does not attest to the accuracy of the information contained in this report and always urges investors to conduct their own due diligence.
