Sealand shares responsibility in fake seal losses

Updated 2016-12-22 10:07:08 Global Times

Securities firm accepts partial blame, along with 22 counterparts

Sealand announced on Wednesday that it would take responsibility for an alleged company seal fraud, which has resulted in fluctuations in the domestic bond market.

The incident will result in a loss of no more than 1 billion yuan (4 million), domestic media reported on Wednesday.

Rumors began circulating around December 14 that Sealand Securities defaulted on a bond transaction with Bank of Langfang in North China's Hebei Province. Bank of Langfang denied the rumors, saying that it didn't do business with Sealand.

Sealand, however, acknowledged that part of the rumor was true. In a statement the company released on December 15, two Sealand employees used a fake seal to sign bond contracts with a number of domestic trade agencies. "Sealand didn't give the two employees authority to sign those contracts," the statement said.

According to the statement, one of the employees had resigned, and the other had turned himself in to police.

On Tuesday, the Securities Association of China met with the agencies involved in the case, the financial news publication Caixin reported on Wednesday. After five hours of negotiation, a consensus was reached that responsibility should be shared by Sealand and the trading agencies. Most of the 22 agencies are securities firms, including Minsheng Securities and GF Securities.

This means that Sealand would pay compensation, but other trading agencies would also bear part of the losses, the report noted.

The 21st Century Business Herald reported on Wednesday that the fraudulent contracts were worth as much as 20 billion yuan in bonds, but the losses amounted to less than 1 billion yuan.

The report cited a person that attended the Tuesday meeting saying that authorities might extend the duration of the bonds to help offset the losses.

Sealand said in the Wednesday statement that it would pursue legal action against the two people who forged the company seal. The firm suspended trading of its shares on December 15.

The incident has brought fluctuations to the bond market in China. On Wednesday, the bond market rebounded strongly, with the 10-year government bond rising 1.57 percent to 96.25 yuan as of closing time, and the 5-year government bond rising 1.09 percent.

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