Greenberg: Revelations Slam Two Chinese Stocks
Two China stocks created through reverse mergers — RINO International and Puda Coal — got hit today: One by the SEC and the other by the company, itself.
RINO International , whose trading shifted to the OTC Pink tier in December from the Nasdaq — in the wake of a string of allegations, including accusations of of improper accounting, made by two research firms (see below) late last year — is now not trading even
Today, the SEC halted trading in RINO temporarily, saying that to regulators it appears that “there is a lack of current and accurate information concerning the securities of RINO,” because it has failed to disclosed that, among other things:
—The outside law firm and forensic accountants hired by RINO’s audit committee to investigate allegations of financial fraud resigned on March 31 after reporting their results to management and the board.
—The chairman of the audit committee resigned the same day.
The SEC also said there are questions about “the size of the company’s operations and number of employees; the existence of certain material customer contracts; and the existence of two separate and materially different sets of corporate books and accounts."
You can read the entire release here.
RINO originally was the focus of negative research reports by two independent research firms: Muddy Waters Research and Citron Research. The company was delisted by Nasdaq after RINO failed answer certain questions raised by the exchange about allegations.
As for Puda : Last week an independent analyst known as Alfred Little posted his research on Seeking Alpha raising questions about, among other things, questionable trading in Puda by its chairman, Ming Zhao.
Today (Monday), Puda announced that its board has started an investigation, but added that the “evidence supports the allegations” that the chairman’s trades were “inconsistent with disclosure made by the Company in its public securities filings.” Zhao has agreed to a voluntary leave of absence until the investigation is complete.
My take: The saga continues.
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