The CMGE website. (Internet photo)
Rumors about a possible scandal at China Mobile Games Entertainment Group (CMGE) have emerged after the Nasdaq-listed company fired nine executives, including its president, the website of Guangzhou's 21st Century Business Herald reports.
CMGE shares plummeted 22.47% on June 19, after an internal email about the removal of company president Ying Shuling, two vice presidents and several executives surfaced earlier that day.
VODone, the Beijing-based parent company of CMGE, also saw its Hong Kong-listed shares suspended on June 20, after falling 9.33%. Trading of VODone stock resumed on June 23.
One CMGE employee said the nine employees had been fired because they had invested in a game publisher set up by former Baidu employee He Yunpeng, but CMGE declined to comment, citing an ongoing investigation.
An analyst said it is likely that these fired executives profited from the stakes they owned in other companies, given the resources they controlled through their position at CMGE.
The company also denied the rumor about over 20 personnel in the management being reassigned following the removal of executives.
A company spokesman told the website on June 22 that the reshuffle of its publishing arm was carried out to improve efficiency and reduce overlapping resources.
CMGE is China's largest mobile game publisher, controlling an 18.1% market share during the first quarter, according to market researcher Analysys International, and the removal of so many executives is not unprecedented in the highly competitive sector, said the report.
The company had already seen a management reshuffle in January after a dispute over the rights to mobile game Fishingjoy led to the discovery of lack of supervision in the publishing arm.
Following the incident, all heads of CMGE's publishing subsidiaries were asked to report to Ying, which indicated company CEO Xiao Jiang's trust in him.
The analyst said the reason behind Ying's removal was very likely linked to serious problems.