Founder Securities shares fall 4%; execs investigated

Shares in Founder Securities Co Ltd, the Chinese joint venture partner of Credit Suisse AG, fell 4 percent on Monday after it warned of major risks to its business after a court froze some of its assets.

The mid-sized brokerage said in a statement dated Friday the freezing of 17 bank accounts holding 1.77 billion yuan ($284.58 million) by its second-largest shareholder Beijing -Zenith Holdings Ltd is affecting normal operations.

While the statement did not provide details on the dispute, Beijing Zenith accused senior executives of Founder Group, the parent of Founder Securities, of embezzling tens of billions of yuan in a Wednesday post on its official Weibo account.

Three board members from Founder Group - Wei Xin, Li You and Yu Li - are under investigation, but the group is still running as normal, according to a statement posted on Founder Group's site Monday.

Huang Guitian, chairman of Peking University Asset Management Co, and two officials from Peking University's Communist Party committee - Meng Qingyan and Wei Junmin - were selected as the new board members. Huang Guitian was appointed as Founder Group's new chairman, said the statement.

Shares of Founder Securities closed 4.83 percent lower at 13.41 yuan on Monday.

The court action, effective from Wednesday, follows an announcement in mid-December by Founder Securities that it plans to sue Minzu Securities, a wholly owned subsidiary of Beijing Zenith which it bought in August, on allegations that it failed to provide information for audits.

Founder Securities founded joint venture Credit Suisse Founder Securities with Credit Suisse in 2008.