US-listed wealth management company Noah Holdings is the latest Chinese firm to see its shares sink due to the disclosure of ties to a person in criminal detention.
The drama began last week when it was revealed that Lo Ching – the 47-year-old founder and chairwoman of Hong Kong-listed firm Camsing International – was held in criminal custody by the Shanghai Public Security Bureau on Friday July 5. A statement by the company did not reveal why she was in custody.
But on Tuesday July 9 the asset management group Noah Holdings reportedly filed a lawsuit against Camsing to regulators in relation to a 3.4-billion-yuan (US$490-million) asset product that is in danger of default, Wang Jingbo, Noah’s chief executive officer and co-founder, said in an internal memo, according to a report by Bloomberg.
Calls by Noah for a fraud investigation sparked quarrels between financial institutions and e-commerce giants JD.com and Suning.com over their roles in the fundraising “scandal” involving Camsing.
It was alleged that underlying assets related to the products were backed by accounts payable to Camsing Global from Beijing JD Century Trade Holdings Ltd, a unit of JD.com. But the e-commerce giant denied any involvement in the fundraising. It says it has been cooperating with police on the matter.
A statement by JD.com on Tuesday accused Camsing Global – despite being a genuine supplier – of falsifying business contracts. JD.com also accused Noah of risk control flaws and said it never received any verification request regarding the financing.
Documents on transactions with Camsing Global presented by police during the investigation all proved to be fake, the e-commerce giant alleged.
However, Noah insisted that it verified all the documents with JD.com by mail and interviews to prove the authenticity of the transactions.
Separately, Yunnan Trust – another asset-management service group – said it also lodged a report to police about more than 1 billion yuan of asset products issued for Camsing Global and supposedly backed by accounts payable from Suning.com. However, Suning.com also denied any involvement and asserted that its business contracts had been falsified, according to a report by Caixin Global.