Probe into manipulation as Ding Yi Feng back in action

Hong Kong's securities watchdog is to launch proceedings against a number of individuals including at least one officer of China Ding Yi Feng (0612) for suspected market manipulation involving that company's shares.

The Securities and Futures Commission meanwhile ended the suspension of Ding Yi Feng shares - that was imposed in March last year - and trading of Ding Yi Feng stock will resume today.

Shares of Ding Yi Feng, which engages mostly in investing in listed and unlisted securities, were trading at HK$23.08 before the suspension.

But the SFC warned that shareholders and prospective investors should be aware the price and trading turnover of shares may fluctuate substantially, so they should exercise extreme caution when dealing in them.

The stock jumped by about 172 percent in 2018 after skyrocketing by more than 1,300 percent during the previous year.

Ding Yi Feng is classified in Hong Kong as a Chapter 21 investment company.

Shareholder activist David Webb had last year noted that such companies are closed-end investment funds, which are not subject to public shareholding requirements of the listing rules, and this was followed by the SFC issuing a warning over an excessive concentration of shareholdings.

Following the SFC's direction to suspend all dealings in the shares last March, Hang Seng Indexes removed China Ding Yi Feng from its listings.

Additionally, MSCI was criticized last year for including Hong Kong-listed China Ding Yi Feng Holdings in its indexes after the company rallied 8,500 percent in five years despite repeatedly reporting operating losses.

The SFC ordered nine brokers twice last year to freeze certain client securities accounts, which were believed to be related to what was suspected to be market manipulation.

Those shares, which account for 32 percent of the total, remain frozen, the regulator noted yesterday.

Some angry investors with a stake in the company marched on the streets of Central to the Central Government Offices in Admiralty late last year, demanding more transparency on the progress of trading resumption applications.

The demonstrators also delivered a petition to the government, asking for control on what they saw as improper enforcement actions by financial regulators.