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t******g
发帖数: 462 | 1 又想严打小中概？
http://finance.yahoo.com/news/SEC-Probes-China-Stock-Fraud-tsmf
NEW YORK (TheStreet) -- The Securities and Exchange Commission is
investigating allegations that U.S. firms and individuals have joined with
partners in China to steal billions of dollars from American investors
through stock fraud, according to people familiar with the probe.
Individuals with direct knowledge of the investigation say that the SEC is
focusing on stock promoters, investment bankers, auditors and law firms that
have been active in recruiting Chinese companies to U.S. stock exchanges
and raising capital for those companies by selling new shares.
On Monday, the SEC made an example of an auditing firm that it said had
failed to protect U.S. investors from overstatement of revenue by a Chinese
firm. The commission said it had reached a settlement with the firm -- Moore
Stephens Wurth Frazer & Torbet -- and with Kelly Dean Yamagata, a partner.
As part of the settlement, the firm will be temporarily barred from
accepting new auditing assignments in China and will pay $129,500.
The case relates to audits the firm did for China Energy Savings Technology,
a China-based company that has been the focus of a series of SEC fraud
complaints since 2006.
John Heine, a spokesman in the SEC's public affairs office, would neither
confirm nor deny a new investigation, citing agency policy against
commenting on active investigations. But the questions that SEC
investigators are asking hint at their direction. Those questions suggest a
suspicion that stock manipulators have devised a kind of template for stock
fraud -- one that exploits fundamental weaknesses in the regulatory
apparatus of the two countries -- and now use the template to cheat
investors in deal after deal.
Word of an SEC probe surfaced during the course of a three-month analysis by
TheStreet, which included interviews with scores of investment
professionals focused on China stocks, together with reviews of SEC
documents, company statements and market data. Some of the same sources
later provided information to the SEC.
Of special concern to the commission is a class of company brought public in
the U.S. through a back-door process known as a reverse merger, sources
directly involved in the investigation have told TheStreet.
Recently, many reverse merger companies have been buffeted by a series of
allegations of fraud. The allegations have had repercussions across the
sector. Investors in the U.S. have suffered related losses in excess of $34
billion, a review by analysts at TheStreet showed. That total adds up all
the market-cap losses for 150 stocks that appear to have been used to bring
Chinese companies to U.S. exchanges. The list of 150 included stocks damaged
by association with such allegations as well as those directly implicated.
Losses were measured from a stock's peak price at any time over the past
five years to its present price.
Over the past year, the SEC has received multiple calls for investigation of
fraud among China-based stocks. Many investment professionals believe an
investigation is due. One is Peter Humphrey, a corporate investigator and
due-diligence expert based in Beijing. Humphrey estimates that as many as a
third of Chinese companies listed on major U.S. exchanges -- the Nasdaq,
Amex and New York Stock Exchange -- are likely reporting fictional profits.
He said he bases that estimate on due diligence research done for clients
and on discussions with client, in connection with acquisitions and
investments in Chinese companies. If the estimate is wrong, it's likely too
low, Humphrey says.
While investors who own individual stocks have the greatest exposure to the
type of fraud alleged, millions of other American investors also are at risk
, through investments in China-oriented ETFs and mutual funds.
To be sure, many Chinese small-cap companies have established the strength
of their businesses with financial statements that withstand the tough
scrutiny of investment professionals. But frequently lack of transparency
and full disclosure -- along with the formidable barriers of language,
distance and culture -- make it difficult for individual investors to tell
the good from the bad.
Concern about a lack of protection for U.S. investors prompted Congress to
ask the SEC for action earlier this year.
In a letter dated Sept. 9, the House Financial Services Committee complained
about a general lack of rigor in the auditing of Chinese companies.
Addressed to SEC Chair Mary Schapiro and her counterpart at the Public
Company Accounting Oversight Board, the letter asked how the agencies
planned to tackle the problem.
"American investors deserve high-quality and independent financial reporting
so that all market participants can trust the accuracy of the audit work
for U.S. publicly-traded companies," the letter said. It was signed by Reps.
Chris Lee of New York and Spencer Bachus of Alabama, who will take up his
new role as chairman of the Financial Services Committee in January. The
rest of the letter communicated a broad concern about fraud among China-
based companies.
Until now, many investors buying China-based stocks traded on U.S. exchanges
have felt abandoned by regulators.
To date, Wall Street has seen only one major SEC prosecution in the sphere.
That was the case of China Energy Savings Technology -- the subject of
yesterday's action.
Three China-based reverse merger companies so far have disclosed current SEC
investigations: China Sky One Medical, Fuqi International and Rino
International. China Sky One Medical has conceded inaccuracies in filings in
China in a press release. Fuqi has received a delisting notice from the
Nasdaq, but has not yet been delisted. Rino recently admitted that some of
its claims about contracts were false, and Nasdaq has delisted that stock.
China Sky One and Rino declined to comment for this article. Through a
spokesman, Fuqi said it is "fully cooperating with the SEC" and that it has
no further comment.
Sources with knowledge of the current SEC investigation say that the
commission has shown interest in at least six additional companies. The
agency's interest is not focused narrowly on individual cases, informed
sources have told TheStreet. Rather, enforcement officials seem to view
individual cases as manifestations of a systemic problem.
Reverse mergers -- sometimes called reverse takeovers, or RTOs -- are
perfectly legal in the U.S., and have been used in the past to give birth to
solid public companies, including the parent company of the New York Stock
Exchange itself. If there is a flaw in the process, the flaw is that it
allows stock manipulators to circumvent regulatory scrutiny.
The process is complex. First, the sponsors find a Chinese company with a
plausible growth story and sell the founders on the idea of raising capital
in the U.S. They then gain control of a U.S. company that is little more
than a shell, but a living shell, with stock that remains listed on a public
exchange in the U.S. The U.S. company buys the Chinese company, essentially
taking the Chinese company public in the U.S. with little regulatory
oversight. The sponsors and company founders can then use optimistic growth
projections to float new issues of stock among American investors eager to
participate in the economic miracle of China.
Frequently the prime movers in the process are Chinese, and never leave
China. They enlist the help of bankers, auditors and stock promoters in the
U.S. with promises of huge profits in the event of success. Often, the
promoters -- some Chinese and some American -- are bailing out just as the
public gets in.
The SEC is focusing its investigative efforts on the American end of the
network. The agency lacks the power to compel compliance with subpoenas in
China -- a fact that has not escaped the notice of dealmakers in China.
A distance of 8,000 miles, together with formidable language and cultural
barriers, makes it tough for any investor to get to the bottom of a business
scenario in China. Even sophisticated investment professionals spending
millions on due diligence have been duped. For the moment, the frequent lack
of transparency between the two countries is seen as camouflage for stock
cheats. But recurring allegations of fraud and new stock blow-ups have
raised questions about the reliability of accounting practices at China-
based companies generally.
Some well-known blow-ups suggest the character of the broader problem:
China Energy Savings Technology: This company -- the focus of yesterday's
SEC action -- billed itself as a manufacturer of "energy savings products."
It agreed to sell $50 million in stock through a PIPE (private investment in
a public equity) in January 2006 and soon registered to sell 10 million
additional shares in a public offering. A month later, the company disclosed
that the SEC had opened an "informal" inquiry into its operations. Within
weeks, many of the top people in the company resigned -- directors,
executives, all the key participants -- and the company went dark in China,
SEC records show. In April, 2009, the SEC obtained judgments finding four of
the principals liable for fraud, on the basis that they had used a phony
shareholder base and phony stock transactions to boost the price of stock
that was essentially worthless, pocketing more than $25 million from
American investors. The judgments ordered them to disgorge their profits and
to pay penalties. The company is defunct.
Bodisen Biotech: This maker of organic fertilizers saw its shares delisted
from the American Stock Exchange in March 2007, partly based on alleged
inaccuracies in its filings regarding the role of stock promoter Benjamin
Wey, president of New York Global Group. Shareholders filed lawsuits
accusing Bodisen of securities fraud, but their complaints were dismissed.
Wey has claimed that irresponsible short-sellers sent the company into a
tailspin. The stock peaked at about $20 in 2006. Its OTC shares traded
recently at about 50 cents. Bodisen did not respond to requests for comment.
Shanghai Medical Technology: This operator of dialysis clinics raised $12.5
million in a 2007 PIPE deal. The money never made it to the clinics -- it
was transferred instead to the personal account of one of the company's
directors, according to a source involved in the deal. The company appears
to be defunct. Multiple attempts to reach company officials were
unsuccessful.
Fuwei Films: This manufacturer of industrial plastic films went public in
2006 through an IPO on Nasdaq. In 2009, the company disclosed that three
executives had been convicted in China on charges that they had illegally
taken control of the business there. Shareholders alleged in a lawsuit that
Chinese authorities were investigating the hijacking of the company while
stock promoters in the U.S. hyped the new issue. The suit charged that
company officials had provided false and misleading informaton relating to
the company's IPO. One of the executives arrested in China has been
sentenced to death there, and the two others to life imprisonment, the
company has said. In September, Fuwei and its co-defendants -- senior
officials and directors of the company -- settled the shareholder suit,
agreeing to pay $2.15 million. Fuwei still maintains that the allegations in
the suit are "without merit." The stock, as high as $15 in 2006, now trades
around $2.
China Yingxia: This health-food company was founded by a nurse-turned-
entrepreneur. It reached a market cap of more than $900 million and then in
2009 stopped filing statements to the SEC. Information remains scarce, but
according to one person familiar with the company, the nurse is now in jail
in China for selling unregistered securities to individuals there, a
violation of the country's securities laws. Attempts to reach the company
were unsuccessful.
Asia Time: This watchmaker started trading on the American Stock Exchange at
$8.50 a share in February 2008. Without warning, the company stopped filing
SEC statements a year later, prompting the Amex to delist its stock. It
occasionally trades on the Pink Sheets and last traded Nov. 26 for a penny.
Attempts to reach the company were unsuccessful.
China Water & Drinks: This bottled-water company merged into a U.S.-listed
shell in 2005. Two years later, it was acquired by a special-purpose
acquisition company run by Richard Heckmann, a veteran U.S. investor based
in Southern California. Four months after the deal closed, Heckmann charged | M*P
发帖数: 6456 | 2 看样子像。
但是最近我盯的中概都在起稳。
that
【在 t******g 的大作中提到】
: 又想严打小中概？
: http://finance.yahoo.com/news/SEC-Probes-China-Stock-Fraud-tsmf
: NEW YORK (TheStreet) -- The Securities and Exchange Commission is
: investigating allegations that U.S. firms and individuals have joined with
: partners in China to steal billions of dollars from American investors
: through stock fraud, according to people familiar with the probe.
: Individuals with direct knowledge of the investigation say that the SEC is
: focusing on stock promoters, investment bankers, auditors and law firms that
: have been active in recruiting Chinese companies to U.S. stock exchanges
: and raising capital for those companies by selling new shares.
| t******g
发帖数: 462 | 3 Care to share your list?
Ｍｙ ｌｉｓｔ
ＣＣＭＥ， ＸＩＮ， ＧＡＭＥ， ＭＹ，ＢＩＤＵ，ＳＩＮＡ
【在 M*P 的大作中提到】
: 看样子像。
: 但是最近我盯的中概都在起稳。
:
: that
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