A Hong Kong company identified as part of a network of penny-stock firms whose share prices crashed spectacularly in June, said two of its executives are under investigation while another firm said it has been "invited to assist" authorities. Both companies featured in a group dubbed in May by independent investor and stock commentator David Webb as the "Enigma Network". Webb charted cross-shareholdings between 50 otherwise unrelated Hong Kong-listed companies.
Several Enigma stocks plunged within minutes of each other on June 28 for no clear reason, erasing over $6 billion in market capitalisation in a single day. Many shares lost more than half their value. Among those whose stocks crashed were Convoy Global Holdings Ltd and Lerado Financial Group Co Ltd.
Late on Thursday, Convoy said in a stock exchange filing that it had suspended two executive directors who were being investigated by "enforcement officials". Lerado said on Friday it had been invited to assist the Independent Commission Against Corruption (ICAC). Also on Thursday, the ICAC said in a statement it had arrested three senior company executives. It did not identify the firms they were connected with, neither did it mention the Enigma Network or any related companies.
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