Jack Ma-Linked Company Under Investigation

Alibaba Founder Jack Ma has gotten his name tangled into another regulatory tussle.

But the company involved with the regulatory criticism that has led to an investigation has denied that criticism. That company in question is Hundsun Technologies, which is the financial tech company that is partially owned by Ma. The company rejected accusations early in the week (July 13), according to a Reuters report.

Hundsun is the subject of an investigation by the China Securities Regulatory Commission that is reviewing claims that its trading platform spurred the drop in China’s stock markets. As a result, the regulator is looking into if Hundsun followed the market rules.

“It’s not objective or rational to say that HOMS was the major force of the stock market turmoil,” Hundsun stated in a filing to the Shanghai Stock Exchange, Reuters reported.

HOMS, the trading system in question, is a cloud-based platform that has been around for just over three years. The system was created for small/mid-sized asset management firms. The platform, however, is suspected to be used by “gray market lenders,” the report indicated, which are suspected to enable people to borrow up to 10 times their starting capital at a high interest rate.

But Hundsun denied claims that it had a role in the stock market fluctuation, saying just 30.1 billion yuan($4.8 billion) was force-sold on the platform during the time from June 15 to July 10 — which made up just .1 percent of all transactions.

As for the Alibaba connection, Ma invested $532 million in Hundsun Technologies in 2014 — giving him a 20 percent stake. Ma reportedly also denied any connection to China’s stock slump and even went as far as blogging on a popular Chinese site known as Sina Weibo, Forbes reported. Alibaba’s financial arm Ant Financial also recently said it would invest more in Hundsun.

Ma remarked on Monday that he was “astonished to hear that Hangzhou became the origin of the market rout, and Jack Ma crashed China’s stock market.” He went on to say that he wasn’t one to speculate on the stock market since he was “someone who was among the earliest to be hurt by stocks.”

 

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