RISK MANAGEMENT

Hong Kong Exchange to Delist China Metal Recycling for Fraud

Two years after trading in the shares of China Metal Recycling, the Stock Exchange of Hong Kong has decided "to exercise its power to cancel the listing of the shares" of the company.

China Metal is given a deadline of 17 January 2016 to remedy "those matters which have rendered it unsuitable for listing," said the exchange.

The stock exchange cited the 9 March 2015 findings by the High Court of Hong Kong that the company had implemented a fraudulent scheme to create accounts which significantly overstated its business and profits.

After its IPO in 2009, China Metal Recycling "continued the fraudulent scheme," said the exchange, until the Securities and Futures Commission filed a petition to wind up the company in July 2013. 

"There is a serious concern about the management's integrity," said the stock exchange. "Through the fraudulent scheme, the Company obtained its initial listing for which it should not have qualified."

"It also misled the investing public to rely on the fabricated operations and financial position presented in its accounts published at the time of the IPO and years thereafter." 

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