SHANGHAI Dec 27 Sealand Securities,
which triggered a rout in China's bond market over the past two
weeks, has signed separate arrangements with seven
counterparties in a bid to resolve a scandal involving "forged"
bond agreements, it said on Tuesday.
"The company is operating normally with a sound financial
situation, and liquidity risks are under control," Sealand said
in a filing to the Shenzhen Stock Exchange.
The brokerage said last week that it had reached a
"consensus" with counterparties to share potential losses
stemming from "forged" bond agreements with a total value of no
more than 16.5 billion yuan ($2.37 billion).
Liquidity in the market was squeezed after the media
reported on the "forged" Sealand bond agreements earlier last
week, sparking volatility and undermining investor confidence.
"Bond agreements", known as entrusted bond agreement
business, were widely used by securities firms to obtain
leverage for bond transactions in order to meet guaranteed
returns to investors.
Sealand defaulted on a bond transaction with Bank of
Langfang, in China's northern Hebei province, following the
recent tumble in bond prices, according to local media.
Sealand said it had no agreement with Bank of Langfang on a
bond transaction agreement and its company seal had been forged
by two former employees.
But the brokerage later used the wording "forged bond
agreement" in a filing to the stock exchange and said it would
take responsibility for the documents to resolve the issue.
($1 = 6.9480 yuan)
(Reporting By Winni Zhou and David Stanway; Editing by Eric