Chinese Movie Star Zhao Wei Goes on Trial for Misleading Investors

Chinese Movie Star Zhao Wei Goes on Trial for Misleading Investors

Xu Zuwei & Liao Shumin

Date: Fri, 07/20/2018 - 21:26 / source:Yicai
 Chinese Movie Star Zhao Wei Goes on Trial for Misleading Investors
Chinese Movie Star Zhao Wei Goes on Trial for Misleading Investors

(Yicai Global) July 20 -- Chinese film star Zhao Wei has gone on trial along with her husband accused of misleading investors with a total of 42 lawsuits brought against the pair.

A court in Hangzhou will hear claims that the movie star provided false securities statements for investors in her and her husband's company Wanjia Culture. The company has now changed name and owners, Zhao is still highly involved in the case. 

In late December, Wanjia Culture posted a statement informing investors that its largest shareholder WHWJ Group planned to transfer its 185 million shares in Wanjia Culture to Longwei Culture Media, representing 29 percent of the company’s total shares for CNY3 billion (USD443 million). Zhao was a key shareholder in Longwei Culture Media at the time.

The Shanghai Stock Exchange responded to the move, asking for confirmation of where the source of the huge sum had come from, uncovering Zhao's plans to acquire Wanjia Culture through loans. The takeover was terminated shortly after following pressure from regulators' questioning. 

After Zhao’s exit from the firm in August 2017, the actual controller of Wanjia Culture transferred all equities of the company’s controlling shareholder WHWJ Group to Sunriver Holdings at a price of CNY1.7 billion, while WHWJ Group held over 29 percent equity in Wanjia Culture. 

According to related materials, Sunriver Holdings is a Zhejiang-based culture and tourism industry investment and operating group. Soon afterward, listed-firm Wanjia Culture also renamed itself Zhejiang Sunriver Culture.

However, Zhao and her husband’s attempt to make something for nothing caused a substantial drop in Wanjia Culture’s stock price. Trading was suspended in late November 2016 and a major assets restructuring was planned. The stock price then rocketed to CNY25 from CNY18 per share upon trading resumption before eventually dropping to around CNY13 per share, with the maximum drawdown hitting almost 50 percent. As of yesterday, the company’s stock price was CNY5.22 per share at the closing.

In April 2018, China Securities Regulatory Commission punished Zhejiang Sunriver Culture, Tibet Longwei Culture Media and Zhao for illegal activities regarding information disclosure, concluding that during the transfer of controlling stakes, these parties seriously misled both the market and investors, and severely impacted the market order. 

Accordingly, some victims took actions to protect their rights, entrusting securities lawyers to sue parties including Zhao on the grounds of false securities statement.

Editor: William Clegg

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Keywords: Zhejiang Sunriver Culture Co., Zhao Wei, LAWSUIT