By staff reporters Yu Ning and Ji Minhua
From Caijing Online

China’s richest man, Wong Kwong-yu, was detained November 19 on alleged share price manipulation, said source closed to Wong.

The 39-year-old Wong is the founder and chairman of China’s largest home appliance retailer, Gome Electrical Appliance Holdings (HKSE: 00493). On its chairman’s arrest, Gome had trading suspended November 24 on the Hong Kong exchange. No further information has been disclosed by the company.

Caijing learned that Wong’s detention arose from an investigation into the unusual stock movements of Shandong Jintai Group (SSE: 600385), a pharmaceuticals and medical equipment company.

Public information shows that share of Shandong Jintai, which is largely owned by Wong's elder brother Wong Chung-yam, capped out at the 10 percent daily limit more than 30 times last year.

On July 9 of last year, the company announced its shareholders would inject 22.1 billion yuan worth of assets into the company; it would also raise about 2.57 billion yuan through a private share placement. The news boosted Jintai's share to a record 26.58 yuan on August 31 2007, up from 3.16 yuan on February 28 that year. But the price soon began a dramatic fall over the year, closing at 2.31 yuan on November 21, 2008.

This is not the first time that the Wong brothers have been the subject of an investigation. Early in 2006, Wong Kwong-yu and Wong Chung-yam were under scrutiny due to illegal loans worth 1.3 billion yuan. The Wong brothers were not detained at that time, and the company later announced that “the investigation was officially withdrawn.”

With 43 billion yuan in assets, Wong Kwong-yu took the top of Hurun Report’s annual list of China’s wealthiest individuals, which was released last month. He owns 35.55 percent of the Hong Kong-listed Gome, which has a market value of about 14 billion yuan.

Gome has struggled lately, with its share value dropping about 50 percent from September to October. Furthermore, there are market rumors that Wong’s private investments in China’s sluggish property market has precipitated a financial crisis for the billionaire, according to a report issued by Bank of China, International.