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| US Regulator: No Action on China Life |
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China Life Insurance Co, the country's biggest insurer, said the US Securities and Exchange Commission (SEC) has terminated a probe into its The securities regulator's enforcement division, in a letter dated June 2, said it had ended the investigation and didn't recommend action, the Beijing-based company said in a statement yesterday. "This indicates that China Life's IPO in 2003 was in full compliance with the requirements of the regulators of the stock exchanges where China Life was listed," said Henry Ding, the chief representative of the China Life was subject to an informal inquiry about accounting irregularities from the According to Ding, there are two types of investigations conducted by the SEC informal and formal. An informal investigation is conducted on a voluntary basis and with the cooperation of the company being investigated. "In the Informal SEC inquiries don't always lead to allegations of wrongdoing. If the inquiry prompts the enforcement staff to suspect that a company has broken US securities laws, the staff must turn to the agency's five commissioners for permission to pursue a formal investigation. In a formal investigation, the SEC staff can demand sworn testimony and subpoena other evidence. "The SEC investigation of China Life was informal from start to finish," Ding added. He believed that the SEC's final decision is due to China Life's active cooperation during the investigation. "Through our communications with the SEC staff, we learned that they are very appreciative of and satisfied with the assistance and cooperation from China Life," Ding said. "And SEC seldom notifies the company under investigation about the result in a written form." China Life provided all requested documents and materials to the SEC by the end of 2004. However, the end of the SEC's informal investigation doesn't mean the closure of a class action filed against China Life by nine law firms from March to May 2004. This lawsuit followed an audit report from the National Audit Office of China (NAO) saying that the China Life Insurance (Group) Co (CLIC), the State-owned predecessor of China's top life insurer, had made investments that were not permitted by the nation's insurance laws and used agents that were not legally qualified, while some CLIC branches had mis-stated expenses and income leading to underpayment of taxes. The NAO also said that it had found accounting irregularities worth about 5.4 billion yuan (US$675 million) at the CLIC. China Life was formed in June 2003 by plucking healthier assets from the CLIC to pave the way for a listing. The CLIC is still China Life's controlling shareholder with a 72 per cent stake. "The termination of SEC's probe makes us more confident in winning the suit," said Ding, adding China Life has no plan to seek an out-of-court settlement for the moment. China Life shares closed at 11.45 yuan (US$1.43) yesterday on the (
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