China Broker Says $35 Million of Investment Products May Default
China Broker Says $35 Million of Investment Products May Default
(Bloomberg) -- Central China Securities Co. said two asset management products totaling 240 million yuan ($35 million) are in danger of defaulting after the borrower falsified documents.
The brokerage said Thursday that it conducted follow-up checks on the products following missed payments to investors in April and May and found that documents used to obtain financing had been fabricated. Central China Securities didn’t provide more details or name the borrower, but said the case is being investigated by the police.
It’s the latest fraud allegation involving Chinese companies amid credit-market stresses that have seen $10 billion worth of missed bond payments this year. The incident also raises questions about risk-management procedures at the nation’s asset managers. On Monday, Noah Holdings Ltd. levied claims of fraud against Camsing International Holding Ltd. related to 3.4 billion yuan of wealth products.
Central China Securities, based in the central province of Henan, has 42 billion yuan of assets, ranking it 42nd out of China’s 98 securities firms, according to the Securities Association of China. Its shares have gained 36% in Shanghai and 6.6% in Hong Kong this year.
To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Charlie Zhu
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With assistance from Bloomberg