China's Founder Securities Co. Ltd. said Aug. 31 that its first-half profit was reduced by around 65 million yuan after it set aside an impairment expense of 87.1 million yuan when a client failed to repay trading losses.
The company has sued client Yang Rujun, as well as Jiasheng Construction Group, which acted as the former's guarantor, for failing to meet debt servicing obligations.
This was based on a contract signed in April under which Yang opened a margin financing and securities account with Founder Securities.
Under the lawsuit, Founder Securities is seeking a return of 136.8 million yuan in financing principal, as well as expenses, interest and litigation costs, among other things. The case has been accepted by the Higher People's Court in China's Hunan province, though it has not been heard.
The company added that the legal action has no significant impact on its business operations, financial status or solvency.
For the first half, Founder Securities posted profit attributable to shareholders of 205.8 million yuan.
As of Aug. 31, US$1 was equivalent to 6.83 Chinese yuan.