ecns [expanded by feedex.net]: Sinovel facing lawsuit from investors

ecns [expanded by feedex.net]

ecns

Sinovel facing lawsuit from investors
http://www.ecns.cn/business/2013/07-01/70856.shtml
Jun 30th 2013, 23:56



2013-07-01 08:56


Sinovel Wind Group, China's largest wind turbine maker in terms of market share, is to be charged with financial fraud by some of its investors, a lawyer in charge of the case told the Global Times Sunday.


"We have received about 50 individual investors' requests for the lawsuit," Li Jian, a senior partner at Zhejiang Yufeng Law Firm, told the Global Times.


The investors bought shares in Sinovel but suffered losses due to the company's fudging of its accounts, Li said.


The company's share price tumbled from 81.37 yuan ($13.17) on January 13, 2011 when it was first listed on the Shanghai Stock Exchange, to 3.81 yuan per share on Friday.


Li said he is still waiting for a statement about the company from the securities regulator, which is expected in a few months.


If the China Securities Regulatory Commission (CSRC) confirms that the company has committed financial fraud, he will initiate the lawsuit on behalf of the investors.


The CSRC announced on May 31 that Sinovel was under investigation for inflating its sales revenue and profit data.


In a statement it filed with the Shanghai Stock Exchange on March 7, the company admitted that it incorrectly reported an extra 929 million yuan in sales revenue and 168 million yuan in net profit attributable to its shareholders in its annual report for 2011.


Individual investors who bought and sold Sinovel's shares and suffered losses between the company's disclosure of its 2011 annual report on April 11, 2012 and March 7 this year are currently qualified to join the lawsuit, Li said.


There is also a possibility that the CSRC may decide that Sinovel misled investors since it was first listed, according to recent media reports.


If this is the case, investors who still hold shares in the company will be eligible for compensation, which is estimated to reach hundreds of millions or even billions of yuan, Li said.


"The fraud is unacceptable as it treated investors like fools," a Nanjing-based investor told the Global Times on condition of anonymity. She bought 700 shares in Sinovel in May 2012, and has seen their value halve since then.


She also said that punishments by the regulator are not tough enough - otherwise there would not be cases of financial fraud such as this.


Sinovel has been suffering in recent years, with its sales revenue and net profit attributable to shareholders falling by 57.73 and 197.31 percent respectively in 2012 from the year before.


It was also charged in the US last week with theft of trade secrets from one of its US suppliers. The company was not available forSunday.


The company's poor performance is partly due to a slowdown in domestic market demand and overcapacity problems in the sector, Cao Yin, consulting director with market research and consulting firm Martec Group, told the Global Times Sunday.


Sinovel took advantage of the financing it got from the A-share market to boost its production capacity and gain its current share of about 20 percent of China's wind turbine market.


The overcapacity issue is still serious, despite consolidation in the sector over the past two years, Cao said.





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