"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner
“The Securities and Exchange Commission has begun a crackdown on the practices of the “reverse takeover” market for Chinese listings, according to people with knowledge of the probe. Specifically, the SEC’s enforcement and corporation-finance divisions have begun a wide-scale investigation into how networks of U.S. accountants, lawyers, and bankers have helped bring scores of Chinese companies onto the U.S. stock markets, these people say.
The SEC has also begun homing in on individual Chinese companies for accounting violations and lax auditing practices, these people say, beyond a number of previously announced investigations.
On Tuesday, the SEC filed a case in the area, settling a lawsuit against accounting firm Moore Stephens Wurth Frazer & Torbet LLP and one of its partners for its audits of China Energy, which was listed on Nasdaq in 2005.
Behind the scenes, the House financial-services committee is also revving into gear, and may hold hearings on Chinese-company accounting in 2011, according to a person familiar with the matter. The committee’s fear is that some companies are rife with self-dealing and potential fraud, and weak international standards have let it go largely undetected.”