Date
26 September 2017
Foreign brokerages in China are required by law to operate through joint ventures with local partners and can hold no more than a 33.3 percent stake. Photo: Bloomberg
Foreign brokerages in China are required by law to operate through joint ventures with local partners and can hold no more than a 33.3 percent stake. Photo: Bloomberg

Founder Group executives summoned in probe

Founder Group said four of its executives have been summoned in an official investigation, although it gave no details, including the authorities involved, Reuters reported.

The group is the parent of Founder Securities Co. Ltd., Credit Suisse AG’s brokerage venture partner in China.

The statement closely followed an announcement by Founder Securities on Friday that a court had frozen 1.77 billion yuan (US$285 million) in its bank accounts, in connection with a dispute with Beijing Zenith Holding Ltd., its second-largest shareholder, Reuters reported.

Beijing Zenith has accused senior executives of Founder Group of embezzling tens of billions of yuan. Founder Group, whose securities unit is separately suing a company bought from Beijing Zenith, has declined to comment on the accusation.

The disputes highlight the headaches confronting many foreign brokerages in China, where they are required by law to operate through joint ventures with local partners and can hold no more than a 33.3 percent stake, the news agency said.

There are concerns that the investigation may disrupt operations at Founder Securities and its venture with Credit Suisse, the report said, citing analysts.

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