(Yicai) May 27 -- Shares in Jiangsu Amer New Material plunged by the exchange-imposed limit today as its controlling shareholder Zhengwei Group stands on the brink of losing its majority stake in the Chinese glass fiber maker through a judicial auction, and as the firm is probed by the country’s securities regulator.

Amer New Material’s stock price [SHE:002201] plummeted 10 percent to CNY5.78 (USD0.80). On May 24, due to heated bidding at the auction, the share price surged 10 percent to close at CNY6.42 apiece.

Just under 3.8 percent of Amer New Material’s equity, held by Zhengwei subsidiary Shenzhen Yiwei New Materials, was auctioned off on May 24, the Rugao-based company said that day. The winning bid was from new materials firm Yinque, which has no affiliation with any of Amer New Material’s major shareholders, at CNY261 million (USD36 million).

The sale has decreased Zhengwei's holdings to 18.8 percent and Jiangsu Jiuding Group and its persons acting in concert are now the biggest shareholder with a stake of 20.3 percent.

The auction was ordered by the Fuzhou Municipal Intermediate People’s Court in southeastern Fujian province on May 23, which together with the Chengdu Municipal Intermediate People's Court froze part of Shenzhen Yiwei’s holdings in Amer New Material on Nov. 24 last year and then all of it on Nov. 27. Although the chairman at the time, Wang Weiyin, became aware of the situation on Dec. 19, Amer New Material did not disclose it until Jan. 12.

The country’s securities watchdog has also filed a case against Amer New Material for alleged multiple disclosure violations, the company said in a separate statement the same day. The China Securities Regulatory Commission’s branch in eastern Jiangsu province has issued warning letters to Amer New Material and Wang, who was also board secretary of the firm, and recorded them in the securities and futures market integrity files.

Zhengwei Group owns around 30 percent of China’s copper reserves at about 30 million tons, financial magazine Anhui Business said in 2016. At the time, Wang was hailed as 'the world's copper king.’ But since last October, the group has been embroiled in a number of lawsuits, and had many of its assets frozen.

Editor: Kim Taylor