More Troubles For China Green Agriculture As SEC Launches Inquiry Into Fraud Claims
Courtesy of Tyler Durden
After a week ago Zero Hedge speculated that China Green Agriculture (CGA) may be the “next Chinese fraud” based on an extensive report by J Capital claiming the company could be shell worth about 80% less than it was trading at the time, it appears that the SEC has finally shut down its midget porn TV station and realized that the microcap market it is supposed to be policing has become a playfield of fraud and 10(b)-5 lies, and has decided to launch an inquiry into the company’s operations looking at the fraud allegations. Once again, Zero Hedge is happy to have brought attention to a problem some may consider epidemic: namely pervasive market fraud and lies.
From The Street:
Securities regulators have launched an inquiry into China Green Agriculture(CGA_) as accusations of fraud continue to dog a universe of small Chinese companies with shares listed on U.S. exchanges.
Based in the central Chinese city of Xi’an, the organic-fertilizer producer and its struggles are emblematic of a trans-Pacific controversy, with investors casting doubt on the probity of hundreds of Chinese companies that have come public in the U.S. through a back-door process known as a reverse merger — sometimes known as a reverse takeover, or RTO.
Over the last year, allegations and revelations of financial fraud have beset these companies to such a degree that the Securities and Exchange Commission has launched a wide-ranging probe, according to people with knowledge of the SEC’s investigation.
China Green Agriculture is one of more than a dozen Chinese companies that SEC investigators have shown a particular interest in examining, those same people have told TheStreet. The agency has declined to comment.
China Green’s chief financial officer, Ken Ren, didn’t respond to requests for comment. Scrutiny of the company has grown heated enough that last week China Green hired New York public relations firm Sitrick & Co., which specializes in crisis management. The firm’s principal, Mike Sitrick, confirmed that the SEC had begun an informal inquiry into China Green Agriculture in September. He wouldn’t comment on the nature of the agency’s interest. No subpoenas have been issued to China Green, he said.
Criticism of the company grew so intense this summer — and, indeed, short positions in its stock grew so large — that China Green issued a number of press releases in September defending the accuracy of its financial filings in the U.S. and denying the fraud accusations.
We wonder how soon before the SEC commences investigations in other alleged Chinese frauds reported previously by Zero Hedge, such as RINO, and more recently, TSTC, based on a report prepared by The Forensic Factor.
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