Greenberg: Another Chinese Stock Blow-up
It’s getting hard to keep the Chinese reverse mergers straight, let alone those that are the focus of alleged accounting problems.
The latest in a string of Chinese reverse mergers that trade in the U.S. to take a hit: ChinaMedia Express holdings, which claims its business is putting television advertising on Chinese inner-city buses.
The company, whose stock has been halted since Friday morning for pending news, announced this afternoon that:
Deloitte Touche Tohmatsu resigned as its independent auditor, saying that it was no longer able to rely on management representations. Deloitte suggested that its concerns cast doubt about prior quarter financial results.
Its chief financial officer, Jacky Lam, resigned immediately.
Its 10-K will be delayed beyond its March 16 due date.
Its board will conduct an investigation into Deloitte’s concerns.
A number of research firms, including Muddy Waters Research, Citron Research and, just yesterday, thefinancialinvestigator.com—run by former financial journalist Roddy Boyd—issued reports critical of ChinaMedia.
The company responded with a press release on February 7, refuting Citron and Muddy Waters saying, among other things, “The Company is strong and doing well. Its revenues and cash position have been audited by reputable and well-known auditors who have confirmed both.”
My take: The “audited financials” defense. Always a red flag.
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