PC retailer Newegg’s stock price declined sharply last week after its majority owner disclosed that its chairman, He Zhitao, was reportedly detained by the Haibei Prefecture Supervisory Commission. According to its SEC disclosure, He’s family informed the company that they received a “Notice of Detention” and a “Notice of Investigation” from provincial authorities, and that he was subsequently detained. China established supervisory commissions as its primary anti-corruption investigatory body in 2018, with each province having its own agency that’s led by the National Supervisory Commission.
The company said that He’s detention is based on personal matters, and that its operations continue normally. “The Company has a sound governance structure and internal control mechanism, and it’s daily operations and management are handled by its executive officers,” Hangzhou Lianluo Interactive Information Technology Co. (Lianluo) said in its statement. “Currently, all other directors and executive officers are performing their duties normally, the Board of Directors is fulfilling its responsibilities in accordance with the laws, and all business activities of the Company and its subsidiaries are proceeding normally.”
