The rumour was true! Hanergy is under investigation

Only hours after the chairman of Hanergy Thin Film Power, Li Hejun, dismissed the possibility of a regulatory probe into his company as “purely rumour” – he claimed “there is no such possibility” – Hong Kong’s Securities and Futures Commission (SFC) announced it would be doing just that.

Hanergy produces solar energy panels and is the largest such company in terms of market capitalisation. It has, however, come up against trouble lately, losing $18.6bn in market value on May 20. Its share price having soared by 600 percent over the past two years, stocks plunged by 47 percent in less than 30 minutes.

The dramatic surge in recent years raised some eyebrows

The dramatic surge in recent years raised some eyebrows. An investigation by the Financial Times raised the question of potential market manipulation, with Rajesh Aggarwal, a professor of financial markets at Northeastern University, telling the newspaper: “This is consistent with the stock price having been systematically manipulated over the past couple of years. This pattern of large price increases during the last 10 minutes of trade is extremely unlikely to have occurred randomly.”

The business model of Hanergy has also been subject to scrutiny. Another Financial Times report found Hanergy to be engaging in questionable business practices, and the majority of the firm’s “reported revenue since 2010 [had] been from sales of equipment to its parent, Hanergy Group, which control[led] 73 percent of its shares”.

The financial regulator gave little information as to the details of the investigation, only saying that, according to Yahoo, “a formal investigation into the affairs of Hanergy Thin Film Power Group has been active and is continuing” as a result of “public interest following reports denying such measures have been taken”. This investigation is one of only two the SFC has conducted in the past six years.