Soho China Confirms Investigation of CFO for Insider Trading

Soho China confirmed on Thursday afternoon that its chief financial officer, Ni Kuiyang, is under investigation for insider trading in the developer’s Hong Kong-listed shares.

The company made the admission after news of the investigation was spread on Chinese social media this week, with netizens adding that the investigation also includes other senior officers of Soho China, with the developer denying these reports of a broader probe.

Soho said that the company and its officers are not aware of the circumstances of the alleged insider trading, nor were they involved in the illicit practices.

Posts on China’s Weibo platform alleged that Ni Kuiyang, who has served as Soho China’s CFO since October 2018, had taken advantage of inside information regarding Blackstone’s proposed $3 billion buyout of the mainland commercial developer last year to garner illicit profits. Ni was said on social media to have been taken away by police, with Soho indicating that she “has been and will be unable to perform her role
as the Chief Financial Officer of the Company until the Investigation is completed.”

Buyout Failure

Zhang Xin and Pan Shiyi’s attempt to sell Soho China, which was scuttled when China’s State Administration for Market Regulation (SAMR) failed to certify that the deal did not violate mainland anti-monopoly rules, has been an object of controversy since shortly after it was announced to the Hong Kong exchange in June of last year.

Serving as chief executive and chairman of Soho respectively, Zhang and Pan were accused of attempting to sell off the company as part of a plan to exit China, with the couple having been seen attending the US Open tennis tournament in New York last September while the mainland remained locked down.

Chinese netizens were quick to criticise Soho’s failure to announce the alleged investigation in a timely manner, with Zhang and Pan having earlier taken flak for reportedly having been in the US for much of the last two years even as the Hong Kong-listed developer has been the target of a series of legal charges by mainland authorities since late 2021.

Having established a portfolio of nine commercial properties spanning 826,406 square metres (8.9 million square feet) in Shanghai and Beijing, Soho has not purchased new projects since 2014 and reported a loss attributable to shareholders of RMB 131 million ($19.6 million) in 2021.

Developer Targetted

After mainland authorities dinged the proposed sale of Soho’s assets in September, several property management companies belonging to the developer were accused of gouging clients on utility charges and fined a total of RMB 86.64 million for “electricity price violations” at seven of the company’s projects in late 2021.

Then in March of this year, Beijing municipal authorities said that they had fined 15 of Soho’s property management companies in the city a combined RMB 115 million, according to local news accounts citing government announcements.

Also in March, Beijing Jianhua Real Estate, which is controlled by Pan Shiyi, was fined RMB 709 million for tax evasion.

Now 44, Ni Kuiyang, is a member of the Chinese Institute of Certified Public Accountants and joined SOHO China in July 2008. Soho said that, in line with the investigation, it has transferred her responsibilities on an interim basis, while adding that the probe is seen having no adverse impact on the developer’s operations.

Thwarted in its attempt to sell office its portfolio of office buildings last year, Soho China in March put on the market 32,000 square metres of strata title assets in Beijing and Shanghai at a 30 percent discount and promised brokers commissions of 4 percent on any disposals. So far, the company has yet to report any sales from that exercise.

Note: this story has been updated to include Soho China’s statement today regarding the investigation.