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Counterparties to share responsibility with Sealand Securities

SEALAND Securities, the brokerage under spotlight due to a recent bond scandal involving forged agreements, has signed deals with seven counterparties to resolve the potential losses, the company said today.

Sealand said “it is operating normally with sound financial status, and has the capability to control liquidity risks,” according to company's filing to the Shenzhen Stock Exchange.

The brokerage said in a statement last week that it had reached consensus with counterparties to share potential losses, but some participants at the negotiation table questioned if such consensus was a justification of forging agreements, and argued that responsibility should be taken by Sealand its own, Caixin reported.

Two of the brokerage’s former employees were alleged to have signed unauthorized bond transaction agreements with Hebei-based Bank of Langfang by forging the brokerage’s seal in mid-December. More than 22 other financial institutions were involved as bond's distributors.

The bond, with a total value of about 16.5 billion yuan (US$2.37 billion), defaulted after a recent tumble in bond prices, local media reported. The 21st Century Business Herald said earlier that the floating loss on the brokerage’s books stood at 1 billion yuan.

The net profit of Sealand Securities was about 1.8 billion yuan by the end of 2015, according to its annual report.


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