The sudden resignation of Lu Hongda, a prominent figure in China’s A-share market who simultaneously chaired Zhidu Shares and Guoguang Electric, has sent ripples through the financial sector. Officially stepping down on April 20 citing "health reasons" and "other important matters," Lu’s departure was initially framed as a standard executive transition. However, revelations of a sexual assault allegation in Florida have since cast a shadow over his exit and triggered a sharp sell-off in company shares.
Reports indicate that a 27-year-old woman filed a police report in December 2023, accusing Lu of sexual assault. While Florida prosecutors eventually declined to pursue an arrest warrant in May 2024 citing "insufficient evidence," the accuser has reportedly continued to seek legal recourse. The discrepancy between the official corporate narrative of health-related retirement and the surfacing of these serious allegations has fueled investor skepticism and highlighted the fragility of Chinese corporate governance when centered on a single powerful individual.
Zhidu Group has moved aggressively to contain the fallout, issuing a clarification that Lu faces no criminal liability and that company operations remain unaffected. Despite these assurances, Zhidu Shares saw its stock price tumble by as much as 9% during intraday trading. The market's reaction reflects a growing intolerance for "key man risk," where the personal conduct of a high-profile executive can erase significant market capitalization in hours.
Lu’s professional background as a former partner at the prestigious Zhonglun Law Firm adds a layer of irony to the legal quagmire. Managing two major listed companies while drawing a combined annual salary exceeding 7.6 million RMB, he was a fixture of the corporate establishment. This case serves as a stark reminder of the reputational and financial vulnerabilities inherent in the dual-chairmanship model, especially when the executive's personal life intersects with international legal systems.