U.S. securities regulators has charged China-based SinoTech Energy Ltd. and its senior executives with misleading investors, 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 (U.S.) 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, Qinzeng 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 for 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."