Hontex agrees to compensate investors $133m

Hontex International Holdings (0946.HKG) agreed to pay its shareholders US$133 million to settle a lawsuit brought by Hong Kong’s Securities and Futures Commission alleging the company had misled investors, Bloomberg reported. The firm “accepts and acknowledges” that it made false claims in its December 2009 IPO prospectus, such as exaggerated revenue and profit figures, but the settlement should not be interpreted as an admission of criminal liability, said a lawyer for the SFC. This marks the first case in which SFC prosecutors have negotiated a share buy-back to compensate investors. The regulator has proposed extending liability to investment bankers for falsities on their clients’ IPO prospectuses, a measure intended to shore up investor confidence following a rash of accounting scandals among mainland Chinese companies listed abroad.