Double due diligence efforts before investing
July 14, 2011 | BY
clpstaff &clp articlesRecent fraud allegations prompts more scrutiny on PRC companies seeking to list
A sound security investment now calls for “doubled” due diligence efforts before and throughout the investment period, say counsel.
Securities regulators from China and the US are looking to more closely scrutinise US-listed Chinese companies following recent accounting scandals that have resulted in slumping securities prices and the short-selling of Chinese stocks.
The flurry of fraud allegations largely involves companies listed on the OTC Bulletin Board (OTCBB) through reverse mergers. This type of backdoor listing is not subject to the stringent review, approval and reporting requirements of the US Securities and Exchange Commission (SEC) that companies listed on the New York Stock Exchange (NYSE) and Nasdaq are.
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