The chief financial officer (CFO) of a Hong Kong-listed Chinese company, Babytree, has allegedly exposed his company’s fraudulent IPO (initial public offering), and his alleged co-conspirator is an NYSE-listed Hong Kong financial institution. The firm has helped list dozens of Chinese companies in Hong Kong and U.S. stock exchanges.
On April 11, Babytree Group’s CFO Xu Chong alleged that several Fosun subsidiary companies, including Babytree, had faked their IPOs. Babytree, a Chinese mother-and-baby e-commerce and community platform, was listed on the Stock Exchange of Hong Kong (HKEX) on Nov. 27, 2018.
Xu alleged that during the IPO process, several key directors resolved to expand the size of the IPO due to a lack of subscriptions for the company’s financing orders. The company agreed with an investment firm, AMTD, to subscribe for $70 million in IPO orders and promised to “return” the entire $70 million to AMTD on the day of the IPO. On the day Xu blew the whistle on the story, the board of directors of Babytree announced that he would be terminated as the company’s CFO….