(Yicai Global) April 11 -- Shares in composite manufacturer China Create Special Material have nosedived today after its actual controller Zhang Wei was arrested for being the ringleader of an organized crime ring.
The Suzhou-based firm's stock [SHE:002290] fell more than 9.4 percent to CNY9.11 (USD1.36) in morning trading and closed the day out at CNY9.18, down 8.7 percent. The case is being investigated but should have little effect on business as Zhang does not work at the firm, China Create said in a statement today.
Police in southern Chinese tech hub Shenzhen announced on Weibo yesterday that they had arrested Zhang, 46, and 43 other suspects on Jan. 3 for organizing, leading or engaging in organized crime, including false imprisonment, blackmail, fraud and illegal possession of firearms and ammunition. Zhang was named as the gang's leader.
The syndicate set up an online finance platform named 88 Fortune and illegally obtained public money by making up investment projects and loaning money at extortionate rates, the police said. The mob resorted to violent means to collect on loans, forced borrowers to take out new loans to cover their existing debts and filed lawsuits based on forged bank statements, it added.
China Create Asset Management, the listed firm's parent and also owned by Zhang, was shut down by authorities shortly after his arrest.
Based in the Suzhou Industrial Park and listed since 2009, China Create Special Material is one of China's primary manufacturers of composite for home appliances. Zhang holds a 32 percent stake in the firm. He also owns 94 percent of affiliate China Create Financial Holdings Group, which specializes in wealth management and online finance.
Editor: James Boynton