Chinese extruder Fuwei Films (Holdings) Co. Ltd. acknowledged that an arrest notice was issued Sept. 28 in China for majority shareholder Jun Yin as well as two other shareholders, Duo Wang and Tongju Zhou.
The People's Procuratorate of Shandong Province, China, issued the warrant, which relates to suspected irregularities including favoritism and the sale of state-owned assets at low prices.
Fuwei, which is listed on Nasdaq, first announced the investigation June 25.
The Beijing-based firm said in an Oct. 16 news release that it had not received any official notification that the investigation relates to Fuwei's purchase of state-owned equipment used in connection with its business.
Fuwei operates through wholly owned subsidiary Shandong Fuwei Films Co. Ltd., which makes biaxially oriented PET films at its sole production site, in Weifang.
Jun Yin holds nearly 53 percent of the company shares. Tongju Zhou, a director of Fuwei Films, and Duo Wang, indirectly own about 12.5 percent.
``None of these individuals are involved in Fuwei Films' day-to-day operations,'' the release said.
Shandong's police department said a special investigation team was formed May 1 by the Ministry of Public Security, the China Banking Regulatory Commission, the National Audit Office and the Communist Party of China's Central Committee for Discipline Inspection.
Rosen Law Firm of New York said Oct. 19 that it has filed a class-action lawsuit on behalf of all purchasers of Fuwei Films stock from the date of the company's Dec. 19 initial public offering through Oct. 16.
The case, pending in U.S. District Court for the Southern District of New York, charges the company and certain of its present and former officers, directors, and control persons with violating the Securities Act by issuing a false and misleading registration statement and prospectus in connection with the IPO.
Fuwei Films was transformed from the former New Luck (Xin Li Ke) Plastics Co. Ltd., one of the core assets of state-owned New Luck Group Co. Ltd., according to the Web site of the Public Security Bureau of Shandong Province.
Fuwei's stock price tumbled after the news was released, from above $10 per share to about $7.