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More Troubles For China Green Agriculture As SEC Launches Inquiry Into Fraud Claims
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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I don't understand - why is fraud as a business model a problem?
Hasn't that been the big banks' model for years?
Big Banks <> Chinese public companies
Politics (in this case the SEC) is war by other means.
Due Dilgence, Bitchez!
The midget porn seems to have wrecked their perspective; they only go after little frauds, not big ones.
Stocks love to climb the walls of worry.
Worry on.
Difficult for the SEC to investigate "pervasive market fraud and lies" when the biggest culprit is the FED.
Fraud as a business model is not a problem. Competition to it, is.
Simply a brilliant application of game theory - truly these are the "smartest guys in the room".
Keep the SEC distracted from the massive - ahem - endeavors by flooding the agency with a never ending stream of microcap scams.
Fraud as a business model is only sanctified for the Fed.
Unfortunately the ability to IPO and go public is under a strict monopoly. So we'll never know who is responsible. It could be anyone.
they should just shut all these stock markets down. Looks like they is all fake to me.
Blows my mind how they will go after the China crooks, but will not touch the crooks here on American soil.
ZH rocks, they roll.
What really amazes me is that with the whispers of corruption of CGA now in the media......people have been buying the bloody stock hand over fist the last couple of days with a lot of calls being ordered. Who buys shit like this? I have a Mar $5 put on this piece of crap, but alas, the markets are so rotten I probably won't see a dime in returns.
same aholes marauding message boards - once they get their sip they shut off the fuckin pump. Just like the broader market...when was the last time you saw someone gloating about their losses. It is easy to post a bunch of motherfuckin charts and look like the genius, they all buy at the bottom and sell at the top - just like the guys that have never left las vegas a loser.
If HFT is 70% of trades, the other 30% must be executed by a few select on this and other boards.
"Ken Ren" - is he related to Ken Ray?
just list all of these pieces of shit on the pinks then nobody would give a shit except the bagholders.
Everything in the Street article was at least 3 days old, if one can manage Googletranslater. We (civilian-investor independents) had people on the ground at CGA, this month and twice before. To date, everything on the operating side of their financials looks plausible.
Of course, that is no guarantee that their books aren't materially fucked in the dark reaches of their balance sheet. And my crystal ball is on the fritz, so I can't sort out God's truth, from 12,000 mi away.
What is unmistakeably clear is that these folks did not "get it". And their government does not get it... that they are going to, at least, have to pretend they take seriously the requirements and demands of the Market. The government hates that, because if some of their privileged behavior in a deal creates an ugly loose end, they are used to the company quietly acceding to get stuck with it. And by way of convenience for all, there was no further mention of it.
Unfortunately now, the shitstain which is created, but in-the-old-days used to default to immediately clean, has to be included in financial reporting.
Did ya see the volume that was on CGA's back when it hit bottom? That price must have had some amazing brakes. It is difficult to explain how some low-tier Chinaling fertilizer company, could suddenly attract such a heavy positive interest, unless it was a cavalry of cocksuckers.
IMHO, CGA will have to re-evaluate some journal entries and assets. E&Y has been in there since the 1st of the year and they'll tidy up. The only way CGA gets bit, is if that twat who was Head Handmaiden to the Banks at FINRA and now Duchess of the SEC decides to act like she can actually comprehend something. But that would cause noises out of the State Dept. And surprise the hell out of the rest of us.
This market is a zoo built in a cesspool.
Try not to feed the monkeys.