Thursday, May 17, 2012

Investor Alert: Alleged Chinese Reverse Merger Fraud

Reverse mergers are increasingly being used by many Chinese companies to publish false or misleading financial statements, which can result in the loss of billions of dollars in market value.

A Chinese company looking to trade in the U.S. and gain access to its capital markets may merge with a publicly traded U.S. shell company. By pursuing a reverse merger, the Chinese company is able to avoid the regulatory process required with an IPO (as the shell company has already undergone this process) and is able to gain access to U.S. capital markets within mere weeks of completing the reverse merger process.

Read more.