Strange Goings on With RenRen IPO

Strange goings on with hot Chinese IPO RenRen, set to begin trading this morning at the NYSE. I understand that the deal closed and priced this morning (it was supposed to price last night)—53.1 million shares were priced at $14 (about $743 million), above the price talk of $12-$14.

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Strange part is, at 8 AM this morning they still had not declared the IPO effective. This is a legal formality, where the SEC essentially declares that the company meets corporate standards and can begin trading. Without this approval, trading cannot begin.

I understand that the deal will be declared effective at 9 AM.

Over the weekend, a RenRen board member—Derek Palaschuk, CFO of Chinese software company Longtop Financial, who was chairman of RenRen's audit committee—resigned following allegations of financial fraud at Longtop that were made by Citron Research.

In addition, there have been irregularities in key numbers RenRen has used in its prospectus. The company had previously stated that is unique user base rose 29 percent in the first quarter compared to the prior quarter; that was revised to 19 percent.

I will be interviewing the RenRen CEO at 9:35 AM live on Squawk Box.

Chinese internet IPOs have attracted enormous attention this year. RenRen is often described as "the Facebook of China."

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