China Forestry CEO's assets frozen by regulator

Hong Kong's securities regulator is seeking to freeze the assets of the chief executive officer of China Forestry Holdings Co Ltd , which is being investigated for accounting irregularities, a court document showed.

The Securities and Futures Commission has applied to the high court to freeze assets of up to HK$398 million ($51 million) belonging to company CEO Li Han Chun, according to the court statement obtained by Reuters on Wednesday.

IFR, a Thomson Reuters publication, said Li sold 119 million shares at HK$3.35 on Jan. 12, the proceeds of which match the sum the regulator is aiming to freeze.

A public relations representative for China Forestry said the company had no immediate comment on the commission's move.

China Forestry's shares have been suspended since Jan. 26 after auditors KPMG found possible irregularities during their audit for the financial year 2010, the company said in a filing to the Hong Kong stock exchange in late January.

We would like to express our regret over the incident. The staff members who are suspected of having been involved in the matter, which is under investigation, have been suspended of all duties, the company said after trading in its shares was halted.

The board of directors has confirmed that it is business as usual at the company. The board has already established an independent committee to look into and follow up the matter.

The stock ended up 1 percent at HK$2.95 on Jan. 26 prior to the suspension but had fallen more than 18 percent since Jan. 12 immediately before Li sold his shares.

Moody's then downgraded the company to B1 from BA3, with a further downgrade possible, the credit agency said in February.