Korean regulator fines China Gaoxian, former chairman, chief financial officer, underwriters

THE South Korean financial regulator has fined scandal-hit China Gaoxian Fibre Fabric Holdings and former key staff over disclosure issues relating to its Korean listing in 2011.

China Gaoxian, which is listed on the Singapore Exchange, said on Thursday that it had been fined 2 billion won (S$2.3 million) by the Financial Supervisory Services of Korea (FSS).

Its former executive chairman Cao Xiangbin was fined 50 million won, while former chief financial officer Raymond Wong was hit with a 16 million won fine.

The FSS has also brought its case against China Gaoxian and Mr Cao to Korean prosecutors.

It also imposed a two billion won fine each on Daewoo Securities and Hanhwa Securities, the underwriters for China Gaoxian's Korean listing. This penalty was for their "failure to carry out proper due diligence on the company".

The penalties were imposed because the firm was found to have exaggerated its cash at the time of its Korean listing by more than 100 billion won, and its failure to disclose material facts relating to its production expansion project.

China Gaoxian said in a statement that it has yet to receive formal notice from the FSS on the fines. It can challenge the fine within 90 days from receiving the notice in an administrative lawsuit.