Another Chinese Stock Implodes as Anti-Corruption Campaign Rolls On

In March of this year, Digital Domain was trading for 20 cents in Hong Kong. It hit HK$2.75 on May 19. There's been no charge that the stock price was manipulated, but the CEO has been detained in Beijing as part of the wider anti-corruption campaign.

Caixin: Special Effects Firm's Stock Tumbles, as Does a Tycoon

The mysterious Chinese businessman behind a Hong Kong-listed movie special effects company that saw its share price fall by more than 40 percent on June 3 was detained by investigators in Beijing a day earlier, people with knowledge of the matter say.

The sources did not say who detained Che Feng, who owns a stake in Digital Domain Holdings Ltd. His mobile phone was switched off, they said.

Che, 45, is a major shareholder, through several of his investment vehicles, in at least four companies listed in Hong Kong, including Digital Domain.

Digital Domain's share price fell to HK$ 1.26 per share on June 3, down 41.4 percent from the previous day, amid speculation that its top managers were being investigated, an accusation an executive at the company denied.

The firm's businesses range from movie special effects to real estate investment and trading. Its main assets include a special effects company co-founded by American director James Cameron that worked on several Hollywood blockbusters.

Company documents show Che owns nearly 38 percent of Digital Domain through two firms he controls: Wise Sun Holdings Ltd. and Fortune Source International Ltd. Even after the price collapse, the paper gain on the investment was more than HK$ 5.8 billion.

...Sources close to the situation said the probe into Che was related to Guo, himself a close ally of Ma Jian, a former vice minister of state security, who was detained in January by the Communist Party's graft buster.

Che lent 600 million yuan to Guo to help him get through a tough period and this cemented their relationship, the people with knowledge of the situation said.

Che is the son-in-law of a former central bank governor and served on the board of supervisors at China Ping An Insurance Group from 2006 to 2009.