HONG KONG • Five months after one of the most dramatic stock crashes in Hong Kong history, the authorities are stepping up their investigation into a group of companies dubbed the "Enigma Network".
The anti-corruption and securities regulators searched eight locations and arrested three senior company executives on Thursday, the Independent Commission Against Corruption (ICAC) said in a statement.
The actions were related to a group of 50 listed businesses highlighted by activist investor David Webb for their complex web of cross-shareholdings, according to a person with knowledge of the matter.
Many of those stocks plunged suddenly on June 27, some by as much as 90 per cent, in a crash that underscored concerns about wild price swings and concentrated ownership of small-cap companies in Hong Kong's US$5.1 trillion (S$6.9 trillion) equity market.
While the authorities did not release the names of companies they searched, Convoy Global Holdings, one of the businesses Mr Webb included in the Enigma Network, said it had suspended two of its executive directors after they were involved in a law enforcement action.
Lerado Financial Group, another firm Mr Webb placed in the network, yesterday said it had been "invited to assist" ICAC in an investigation. Trading in six of the 50 Enigma stocks has been suspended, Mr Webb said yesterday.