Major Chinese Producer May Be Fraudster

China Lumena New Materials, a company that has claimed it is the world’s largest producer of the plastic polyphenylene sulfide (PPS), is fighting allegations that it lied to investors amid reports that both its chairman and its largest investor have disappeared. Lumena’s difficulties began last month when Glaucus Research Group, a U.S. investment firm that short-sells troubled companies, issued a damning report on Lumena. Among various accusations, Glaucus claimed that Lumena actually sells only 10% as much PPS resin as it reports in its income statements. Glaucus further accused Lumena of overstating its sales of the laxative thenardite. After the Glaucus report came out, Hong Kong Stock Exchange-listed Lumena failed to file its audited 2013 financial statements, which were expected in April. Trading of the company’s shares was suspended shortly after.