SEC targets Chinese companies for defrauding investors after whistleblower reports

The United States Securities and Exchange Commission is now examining a number of Chinese companies that are trading on the U.S. stock exchange where it is shown that there are financial irregularities or fraud including foreign bribes. As a result, as of December 2012, over 45 Chinese companies were delisted from the U.S. stock exchange due to mismanagement, financial irregularities and other compliance issues. In addition, a growing number of cases and investigations are occurring as a direct result of whistleblowers coming forward under the new SEC whistleblower program allowing for information to be provided anonymously though counsel. The whistleblowers are allowed to collect up to 30% of what the government recovers, regardless of where they live and the largest payment to a whistleblower came last year with an award of $104 million to a former Swiss banker. Last week, the SEC charged the China, based advertising company China Media Express with fraud and misleading investors. The company and its CEO Zheng Cheng are accused of overstating values of cash balances to the SEC by up to 40,000 percent. According to reports, in 2009 the company reported it had $57 million in cash on hand when it had only $141,000. This allowed the company to attract investors and raise money from stock sales. Other U.S. delisted China based firms include SinoHub Inc.; China North PEast Petroleum Holdings Ltd.; China Medical Technologies Inc.; and Sino Clean Energy Inc. Jeffrey Newman represents whistleblowers. jeffrey.newman1@gmail.com.