The China Securities Regulatory Commission (“CSRC”) released a statement Friday on its investigation into six companies over alleged securities violations pertaining to initial public offerings and disclosures.
CSRC Cracks Down on Fraud
The six companies are Guangdong Guangzhou Daily Media Co., Ingenious Ene-Carbon New Materials Co., Infotmic Co., P2P Financial Information Service Co. and Shenzhen Ecobeauty Co and Longbao Ginseng & Antler Co. (which has applied for a listing and is not yet public). These six are the first cases announced following the start of a CSRC crackdown on IPO fraud.
The alleged violations in the six cases include false representations in IPO prospectuses and misrepresentations regarding revenue and net income. The CSRC also announced it was pursuing certain third parties involved in the transactions, including underwriters, auditors and lawyers.
The CSRC has assembled an investigative team to look into potential securities violations, and it appears this is only the first round in a push for greater compliance with securities laws.
Jeff Petersen is an attorney licensed in California and Illinois representing clients in a wide variety of SEC investigations and SEC enforcement actions. He can be reached in California at 858.792.3666 and in Illinois at 312.450.4584.