Shareholder to sue Yaxing over irregular stock trading
Updated: 2007-07-18 08:49
A shareholder of Yangzhou Yaxing Motor Coach has handed an indictment paper to a Shanghai court over his losses as a result of the company delaying its scrip share issue and setting no trading limit for two consecutive days.
Tan Zhengbiao, from Wuhan, capital of Hubei Province, has accused the company, Shanghai Stock Exchange (SSE), and the Shanghai branch of China Securities Depository and Clearing Corporation Ltd (CSDCC) of causing him at least 70,000 yuan in losses.
Judges of the Shanghai No 1 Intermediate People's Court told Tan on Monday that they would respond to his paper in a week and tell him whether they will accept his case or not.
But experts warned the case will most likely be rejected because of the lack of relevant laws in the country defining such malpractices, if they can indeed be termed so.
Yaxing, listed on the Shanghai Stock Exchange in 1999, suspended its share trading in May 2006 after making losses for three consecutive years, from 2003 to 2005.
It was approved to re-list on July 5 after a series of restructurings. It promised to issue free shares to its existing shareholders when trading started. It had also included in the re-listing announcement that it would set no trading limit that day.
But shareholders did not get the promised free shares until a day later, for technical reasons, according to an announcement on the stock exchange's website.
More than 26,000 shareholders did not get the promised shares while thousands of other investors purchased Yaxing's shares on July 5.
The stock fluctuated widely in the first two days of trading, partly because of concerns about the anomaly and partly because of the fact that no trading limit was set on the first day. After discovering the "malpractice", many shareholders dumped their stakes.
The highest rise on July 5 was 308.81 percent and the lowest dive the day after was 14.83 percent.
More than 30,000 investors said they suffered huge losses. Shareholders who had their free shares delayed missed the opportunity to sell them at the highest price while those who purchased at the highest price found their investments shrinking dramatically.
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