Hundsun Technologies has been accused of involvement in China's stock market rout.
The Chinese stock market collapse has appealed significant attention from analysts across the world. As a result, several companies, including Hundsun Technologies Inc. have come under examination. Hundsun is working under Alibaba Group Holding Ltd.'s founder, Jack Ma. Yesterday, Hundsun defended itself against media allegations of the exploitation of platform and worsening the drop in stock market of China.
A statement has been filed by the company with the Stock Exchange of Shanghai yesterday, defending its collapse recently, the company said, "its not objective or rational to say that HOMS was the major force of the stock market turmoil,"
The selloff in stock exchange was trickling into Chinese companies shares listed on United States stock exchanges. Experts warned that without satisfactory measures taken to stop the spillover, losses might extend more. Consequently, the China's securities regulators have restored efforts to interrogate into identity fraud or the margin lending, as per the Financial Times report.
China Securities Regulatory Commission clarifies, as per Financial Times, "For some time, some institutions and individuals have employed information systems to open fictitious securities accounts for clients, using other peoples' securities accounts for loaning out their own."
To make regulatory measures strict, Security minister of China began an inquiry into institutions that are supposedly involved in selling blue chip shares. Mainland stock markets of the country made huge gain in 2014, made reasonable profit by margin lending. However, margin lending powered the rally in stock markets of China last year; it established a bubble which started a losses stream in June 2014.
Fund matching firms have amalgamated a trading program in the system, established by Hundsun Technologies. This helps firms to split their securities account, allowing clients to trade it.
Securities Regulatory Commission of China adds, "In recent days, as the market has regained stability, this illegal phenomenon has again staged a comeback, and may again be threatening the stock market's stable function. It must be cleaned up,"
Though, the commission explains that the selloff by Hundsun Technologies HOMS cloud based system carries "a small fraction" of overall transaction value. High amount of criticism was made by local media channels, which believes that the company is responsible for the losses.
Furthermore, Hundsun fortified that its online platform only accounted for only 0.1% of overall transaction volume on July 15 ten periods.
Hundsun Technologies Inc. stock was up 10% to $80.87 at market close yesterday. While, Alibaba Group Holding Ltd.'s stock went up by 1.6% in NYSE and closed at $80.31 on Friday.