Fashion chain Gay Giano announced on Tuesday that its chairman Cheung Sing Chi had quit after he was accused of securities fraud.

The firm issued a statement in which it said that Cheung - who owns a 60 per cent stake - and his sister and brother-in-law would stay as executive directors. It also plans to employ Cheung as a fashion consultant.

"In light of the allegations against him and in the interests of the company and the group, Mr Cheung has agreed to resign (as) chairman and executive director of the company with effect from 8 July 2002," it added.

Gay Giano said Cheung's resignation came after the Commercial Crime Bureau charged him with "dishonestly creating a false or misleading appearance of active trading in the shares of the company" between 1999 and 2000.

According to the South China Morning Post, Cheung appeared in court last week but did not enter a plea. It added the firm's shares have been suspended since July 3.