* SEC: company lied about asset value, use of IPO proceeds
* CEO, ex-CFO are charged in connection with alleged fraud
* SinoTech chairman also accused of stealing $40 mln
* Latest in crackdown on accounting at Chinese companies
By Sarah N. Lynch
WASHINGTON, April 23 (Reuters) – U.S. securities regulators
charged China-based SinoTech Energy Ltd and its
senior executives with misleading investors on Monday, part of
an effort to crack down on accounting problems at Chinese
companies listed in the United States.
The Securities and Exchange Commission’s civil suit, filed in
a U.S. district court in Louisiana, alleges that the oil field
services company and its executives “continuously and
intentionally misled investors” about the value of its assets
and how it used the $120 million in proceeds from its November
2010 initial public offering.
The SEC alleges that SinoTech Chief Executive Officer
Guoqiang Xin, 47, and former Chief Financial Officer Boxun
Zhang, 35, were responsible for the alleged fraud.
The SEC also charged the company’s chairman, Qingzeng Liu,
50, saying that he stole $40 million from a SinoTech bank
account.
The investor protection agency is seeking financial
penalties and to bar the executives from serving as officers or
directors of U.S. public companies.
An attorney for the company was not immediately available
for comment.
For more than a year now, the SEC has been probing
accounting irregularities and other problems at Chinese
companies that are listed on U.S. stock exchanges. The
accounting issues have led auditors to many of the companies to
resign, and have also prompted U.S. stock exchanges to delist or
halt trading.
SinoTech was previously listed on the Nasdaq market, but its
shares were halted in August 2011, the SEC said. The company’s
auditor resigned in September 2011 and withdrew its audit
opinion.
Nasdaq then suspended trading in October 2011, and delisted
the stock on Jan. 6, 2012. The shares now trade on the Pink
Sheets.
“SinoTech’s brief life as a public company in the U.S.
markets has been rife with falsehoods,” said David Woodcock, the
director of the SEC’s Fort Worth Regional Office. “Investors
deserve the utmost honesty and transparency from companies and
their officers when they tap public markets in the United
States.”
