HONG KONG’S securities regulator will allow mainland solar company Hanergy Thin Film, the subject of a high-profile investigation for alleged market manipulation, to resume trading provided it meets certain conditions, a source with direct knowledge of the issue said.

    Hanergy asked the Hong Kong stock exchange to suspend trading in its shares May 20, 2015, after the company lost half its US$40 billion market value in just 24 minutes.

    Hong Kong’s Securities and Futures Commission (SFC) announced eight days later it was investigating Hanergy’s “affairs” and subsequently directed the bourse to extend the suspension indefinitely.

    The one-and-a-half-year investigation into Hanergy, among the most high-profile ever conducted by the SFC, has raised fears over widespread market manipulation in Hong Kong, denting the city’s reputation as a global financial center.

    The SFC has told Hanergy that in order to resume trading, the company must appoint a financial adviser to draw up and submit a resumption proposal.

    A company-appointed auditor must submit a “clean report” signing off on the health of the firm’s accounts, the source said.

    Ernst & Young, Hanergy’s external auditor, has issued a “qualified opinion” on the 2015 accounts, according to Hanergy’s 2016 interim report filed with the exchange in September. Auditors typically issue a qualified opinion when they believe the financial information is not complete.

    Li Hejun, chairman of parent Hanergy Holding, was also required to resign from the Hong Kong-listed arm as a condition for resuming trading, the source said. Li stepped down in May.

    It was unclear if Hanergy would be able to meet the conditions, the source said.

    “It’ll be difficult for them to find a financial adviser that satisfies the SFC — some major international and mainland banks have rejected them,” the source said.

    The SFC and Hong Kong exchange are under growing pressure from investors to speed up the resumption of suspended stocks. Hong Kong’s rules allow shares to be suspended indefinitely, meaning investors can be trapped in bad companies for years.

    The SFC’s new head of enforcement, Thomas Atkinson, is also keen to wrap up many of the more than 1,000 investigations the SFC opened in the years prior to his appointment in March.

    The Hong Kong bourse last year asked Hanergy to hand over the accounts of its parent firm before it would let the suspended stock trade again, but Hanergy rejected the request. (SD-Agencies)