SEC Gets Tough With Chinese Stocks: Greenberg
With each passing SEC suit against a once high-flying U.S. traded Chinese company, it becomes striking how pervasive the alleged fraud was in some of these companies.
Over the past six months, the SEC has filed charges against just three companies, but the U.S. registrations of 34 Chinese companies have been revoked; 40 in the past 12 months.
The most recent to be charged, with a complaint filed Monday: SinoTech Energy, which the SEC alleged overstated the value of its primary operating assets. The SEC also charged that its chairman, Qinzeng Liu, “secretly” siphoned at least $40 million from the company’s bank account last summer.
Issues at SinoTech were first brought to light by AlfredLittle.com, a website (whose principles are anonymous) that issued a 30-page report last August alleging, among other things, that SinoTech’s Commission filings were false and misleading.
The company fired back, saying the report was “inaccurate and defamatory.”
From the press release: Mr. Guoqiang Xin, chief executive officer of SinoTech commented: ‘We are outraged by this blatantly self-interested, mercenary attempt to profiteer at the expense of SinoTech and its shareholders.’”
In its complaint, the SEC says Xin and former CFO Boxun Zhang “were responsible for the fraud.”
An $8 stock at its peak in March 2011, SinoTech now trades for 2 cents, down 25 percent from Monday.
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