On 25 March 2014, China Lumena was attacked by short-seller Glaucus Research alleging that 90% of sales and profits had been fabricated. Management immediately requested a share suspension pending a rebuttal. However, on 28 March, the company announced that it auditor BDO would need additional time to finalise the FY13 accounts. Under Hong Kong listing rules, a company shares remain suspended until it can produce audited results (these were not forthcoming until July 2017). On 1 April 2014, short-seller Emerson Analytics issued a report which also alleged that China Lumena was a fraud. In December 2014, the company announced that the banks were pulling their credit lines which was pushing the company into default (despite large cash balances). This led to a winding up petition in February 2015. The company appears to have lost control of its Chinese subsidiaries and has yet to address alleged accounting irregularities. Its shares remains on prolonged suspension.

Last updated August 2021

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