Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Hi Michael,
I know your busy, however, I was wandering whether any news was released by the company.
Regards,
Omkar
Hi Omkar,
I hope you are well. I am awaiting concrete news from the company later this week. I will give you a call as soon as I hear. If I haven't heard anything before Friday, I will give you a quick call or email in any case.
Best regards,
Michael
Hi Michael,
I hope all is well and your travels were rewarding. What news do we have for Shop Eat Live?
Kind regards,
Omkar
Hi Omkar,
I hope you are well. I have been travelling for the past couple weeks. I just returned tonight. I will call you tomorrow with an update.
All the best,
Michael
Hi,
I have not had any response so far, is there any update?
Regards
Omkar
Hi,
I don't think I had a reply to my previous email, if Michael is unavailable can someone else please provide me with an update regarding Shop Eat Live ipo?
Regards
Omkar
Hi Michael,
I have not seen any further news on the internet or changes to their website/facebook pages. Is there any further news?
Kind Regards,
Omkar
HI Omkar,
Happy New Years! I wish you and your family all the best for 2013. SEL has not hit the market yet. I am awaiting updated information and will revert to you as soon as I have it. In this regard, I do expect the stock to hit the market imminently.
Best regards,
Michael
Hi,
I don't think I had a reply to my previous email, if Michael is unavailable can someone else please provide me with an update regarding Shop Eat Live ipo?
Regards
Omkar
Even though Guardian lost its license in November of 2012 the company was still engaged in the investment business. This prompted the MFSA to issue another warning on December 28, 2012.
MFSA WARNING Guardian Securities Limited
It has come to the Malta Financial Services Authority’s attention that the website of Guardian Securities Limited <www.guardiansecurities.net> states that the company is licenced by the MFSA to provide investment services.
The MFSA wishes to alert the public that, on the 28th November 2012, Guardian Securities Limited’s licence was revoked on regulatory grounds. This revocation was notified by means of the Authority’s public notice MFSA Ref: 64-2012, which was issued on the 29th November 2012.
The MFSA warns consumers of financial services not to enter into any financial services transaction with financial intermediaries, unless these are in possession of a licence to provide such services from the MFSA or from another foreign reputable financial services regulator.
A list of entities licenced by the MFSA and those licenced by European Authorities and which are allowed to provide investment services in Malta is available at the following link.
Should you have any queries regarding this warning, please do not hesitate to contact Dr Sarah Pulis spulis@mfsa.com.mt and Mr Nathan Fenech nfenech@mfsa.com.mt.
Communications Unit
Malta Financial Services Authority MFSA Warning: 07-2012
28th December, 2012
MFSA WARNING Guardian Securities Limited
It has come to the Malta Financial Services Authority’s attention that the website of Guardian Securities Limited <www.guardiansecurities.net> states that the company is licenced by the MFSA to provide investment services.
The MFSA wishes to alert the public that, on the 28th November 2012, Guardian Securities Limited’s licence was revoked on regulatory grounds. This revocation was notified by means of the Authority’s public notice MFSA Ref: 64-2012, which was issued on the 29th November 2012.
The MFSA warns consumers of financial services not to enter into any financial services transaction with financial intermediaries, unless these are in possession of a licence to provide such services from the MFSA or from another foreign reputable financial services regulator.
A list of entities licenced by the MFSA and those licenced by European Authorities and which are allowed to provide investment services in Malta is available at the following link.
Should you have any queries regarding this warning, please do not hesitate to contact Dr Sarah Pulis spulis@mfsa.com.mt and Mr Nathan Fenech nfenech@mfsa.com.mt.
Communications Unit
Malta Financial Services Authority MFSA Warning: 07-2012
28th December, 2012
When you are dealing with an individual purporting to be a licensed advisor for Guardian Securities Ltd. in Malta, make sure you call the MFSA and investigate whether the individual has a license. In the case of certain individuals selling a private placement from America this is not the case. This individual is using an alias. You may contact privately and I will share the details.
Seems like a second round of mass resignations at Guardian. I would imagine the model is flawed and nobody wants to attach his name to any deal this company promotes including the now defunct Private placement they were selling.
RACS Consulting is a total scam. They are contacting shareholders of company's claiming to work on takeovers. I have notified the F.S.A. yesterday. They ask for advance fees on the sale of your shares. Funny thing is and all the shareholders are aware that the CEO has over 75% of the company shares so the shareholders always contact the company.
This is the email they sent the shareholder. I have blacked out company and shareholder name.
From: RACS Consulting <michael.porter-smyth@racsconsulting.com>
To: ___________@btinternet.com
Sent: Tuesday, 9 October 2012, 10:58
Subject: Unable to Contact
Dear Mr. Tho,
I have not spoken to you before however we have recently acquired a company called Marquis Holland.
I have been trying to contact you unsuccessfully over the recent weeks in relation to the acquisition of BBB Mining. I am currently working night shifts to try and accommodate the european shareholders involved in the acquisition and would be grateful if you could notify me by return email of a suitable contact number and time where you can be reached (before 1pm UK time) so that I can update you on the situation.
Kind regards
Michael Porter-Smyth
Head of Legal Department
RACS Consulting
32 N Rhett Ave,
Staten Island,
New York,
10308,
U.S.A.
Tel: +1 (888) 215 1017
Fax: +1 (888) 216 5023
Email: info@racsconsulting.com
Web: www.racsconsulting.com
Ask for Copy of the Guardian Securities Advisors Passport who is making the recommendation to purchase stock to you. Aside from using proxies to mask his ownership of Guardian Securities, Michael Shumak uses an alias when dealing with prospective investors and investors. He is not a licensed individual and may not sign orders. If he takes an order he is having it signed by a registered individual. MFSA regulations clearly state that only registered individuals may dispense investment advice. Assistants may only dispence general information about the company they work for and the services they may provide.
Michael Shumak beneficial owner of Guardian Securities Limited also of Transnational Securities and Trust and Morgan Finch, Mitchell Finch will be joining us soon to attempt to spin his involvement. I will be posting his Guardian Securities related personal emails shortly once his blog is posted.
Don't buy illiquid thinly traded stocks from this company. They pay between 15% to 20% of the cost you are buying it at. There will be no support if you try to sell.
Stay tuned for the new Michael Shumak Blog. Link will be here and several other forums. Read Michael in his own words. Read how he replaces proxies and how his proxies respond. Read Lawyers representing his ex proxies in their own words describe Shumak. Read Shumak's rants and Threats.
Read all about this master of the universe as he cheats investors and employees alike.
Its all coming to the internet soon..
Be very careful. If you are sold a blue chip stock, make sure it is delivered to your account. If they try to tell you to sell it to buy a cheap stock that wasn't trading at least a 1/2 million shares a day for the last 1 year, don't buy it...the volume will dry up quickly. That is the Chink in the illiquid stocks armor. Furthermore make sure you record the name of the person who made the recommendation and sold you. Ask him to see a copy of his license with the MFSA. They do provide this document in pdf format.
Shumak's name isn't down with the MFSA. He uses proxy's because of his reputation with Transnational Securities & Trust. JOHN KIM IS THE CEO of this financial advisory. He doesn't live in Malta. He just takes his marching orders from shumak.
This Chinese reverse merger is a scam. It always was and always will be. Michael Shumak at Guardian Securities took a block off of a Belmont Partner now ex employee for 10 cents on the dollar for Guardian to sell through boiler rooms and Guardian would sign the tickets. Only problem was the employees of Guardian did some due diligence on the company such as the mass resignation of the board, the Barrons article on Belmont partners and their 40 Chinese reverse mergers of which Longhai was one. This article went on to say the SEC was investigating these reverse mergers. Indictments have already come down on one. The replacement of the CFO with a Chinese national who signed a contract for the equivalent of $542.
Yea, keep trying to F--K the faceless.
SCAM, that's my point. It was posted as trading at $15. That's my point.
Nonsense....the stock is $1.17 on 11,000 share volume...gimme a break $15..in your dreams or a huge reverse split.
Shumak runs the company through his Proxy John Kim an attorney licensed in Ontario. Jon Kim is aware of Shumak's business plan. The regulators have the information but it won't mean anything until the complaints start rolling in. Thats when you'll see the rats jump ship. All of the original employees resigned from the company before the company started doing business as Shumak and his proxy John Kim an attorney from Ontario Canada never lived up to the deal made. John Kim replaced Shumak's previous proxy who resigned being owed 6 figures and in disgust. The other employees were owed in multiple six figures and the Director resigned because of regulatory fears in particular the wires to guardian Securities that could not be sourced properly.
Penny Stock Alert sites throw TAEC to the wolves when the company's disastrous Balance sheet is spread over the internet.
TAEC claims to be engaged in the "green energy" business. Such claims may sound a little far-fetched when your company's latest 10-Q report lists $1 thousand in total assets and current liabilities of about $2.75 million.
It gets better as you go on - TAEC is swamped in convertible notes it issued. As of April 30, 2012 the company had convertible notes payable amounting to nearly $1.5 million. Somehow, TAEC thought it wise to issue those notes at conversion rates ranging from $0.001 to $0.0001 per share. To put it in the simplest terms, should note-holders decide to convert, $100 can land them up to 1,000,000 shares of stock, just begging to be dumped into the hands of hyped-up traders.
One of the parties pushing TAEC is paid pumper TheStockPsycho. His previous promotional attempts have been far from successful. Examining one of his previous pumps - LDSI, it seems that he's pretty good at losing investors some cash. By Todor Pichurov
Total Scam...rumor has it the CFO is going to get a raise from the equivalent of $542 per month to $546 per month.
TAEC claims to be engaged in the "green energy" business. Such claims may sound a little far-fetched when your company's latest 10-Q report lists $1 thousand in total assets and current liabilities of about $2.75 million.
It gets better as you go on - TAEC is swamped in convertible notes it issued. As of April 30, 2012 the company had convertible notes payable amounting to nearly $1.5 million. Somehow, TAEC thought it wise to issue those notes at conversion rates ranging from $0.001 to $0.0001 per share. To put it in the simplest terms, should note-holders decide to convert, $100 can land them up to 1,000,000 shares of stock, just begging to be dumped into the hands of hyped-up traders.
One of the parties pushing TAEC is paid pumper TheStockPsycho. His previous promotional attempts have been far from successful. Examining one of his previous pumps - LDSI, it seems that he's pretty good at losing investors some cash. By Todor Pichurov
I know the people from Canada selling it in Europe through boiler rooms.
http://www.nasdaq.com/symbol/taec/institutional-holdings
how do you identify the Proxy? Simple, you look for the managements ownership. Insiders.
Contact this link after TAEC runs up & tanks if you get sold this stock in Europe from a Financial Advisory. I'll be able to fill you in on the who's, what's and where's.
TommyBoy must be PROMOTOR of TAEC. Seems to take this quite personally. Is it a coincidence that this company had virtually zero volume 2 weeks ago and all of a sudden volume has picked up at the same time BOILER ROOMS in Europe are selling the stock. Some BOILER ROOMS are passing their orders orders through to a small licensed Financial advisory soon to be named who are allowing these BOILER ROOMS TO ILLEGALLY PITCH THE STOCK. The advisory are paying a small fraction of the offer price and the Boiler Rooms are winning about 60% of the total price the unsuspecting client pays.
Any Comment Tommy Boy?
More facts, Boiler rooms marketing stock in europe.
Pump and Dumpski sat on a wall, TAEC will be Pumped up, then have a BIG FALL
Yes,put it on your radar for the latest pump and dump.
Let me see...there's a lot of liquidity with this gem. 2500 at 0.86...wow almost $2000
another 2500 at 0.82 = $2000
the others are out of the way because they don't want to take any stock...so this gem is liquid for about $4000...guaranteed if the bid gets hit at 0.86....0.82 gets out of the way...
What a bunch of hooples....
There is no link. It is officially in Guardian Securities Minutes. A former advisor, and former Director reported it internally to the MFSA. It has been noted by the MFSA.I can't say for sure whether the MFSA will share this information. But it is worth a try.
I feel sorry for you. Total Scam. The CFO makes about the equivalent of $500 a month. The board are nominees and the beneficial ownership of this Chinese Reverse Merger are hidden. This company was the subject of a Barrons article about Chinese reverse mergers and the SEC's ongoing investigation of them. One of the original promoters was indicted and one of the companies was indicted last year. Stay tuned.
what is more sad is that one of the promoters of the company formerly of Belmont partners sold a block of Longhai stock to Michael Shumak the former Transnational Securities & Trust SA boiler room operator now in charge of Marketing at the currently suspended firm Guardian Securities in Malta for pennies on the dollar and did some unauthorized trades with unsuspecting investors at $4 per share.
This was reported to the MFSA and is public record.
Mergers That Don't Enrich Shareholders
By BILL ALPERT
Reverse Mergers of Chinese companies continue to sag
Clarification: This storry did not make sufficiently clear that William H. Luckman had no connection with a company called Pegasus Wireless.
Correction: An earlier version of this story incorrectly said that an investment banker named William H. Luckman was the grandson of the late Chicago Bears' quarterback, Sid Luckman. They are not related.
We were on to something when we warned investors against the hundreds of Chinese businesses that had their shares listed on U.S. exchanges through the back-door technique of reverse-takeovers ("Beware This Chinese Export," Aug. 30, 2010).
The stocks have been poor performers. Two weeks ago the Wall Street Journal reported a wide-ranging investigation by the Securities & Exchange Commission, which is looking into the supply chain of stock promoters, bankers and accountants who have brought public some $50 billion worth of such stocks by merging China ventures into publicly traded American shell corporations. Congress members have vowed to hold hearings. On Dec. 20, the SEC fined a California audit firm featured in our story -- Moore Stephens Wurth Frazer & Torbet -- which agreed to a bar from auditing additional public-company clients in China, Hong Kong and Taiwan.
But that modest action by the SEC may be the only regulatory effort that investors can expect for quite a while. People with first-hand knowledge of the SEC's inquiry say that its investigators are worried about the expense of probing overseas businesses, especially because the agency can't subpoena evidence from China.
Warning Still Applies
Since our story in August, the median reverse-merged China stock has lagged the Halter index by 14 percentage points.
Investors don't need evidence of securities violations to conclude that reverse-merged China shares are lousy stocks. Our August story showed that the median performance of this type of stock was about 75% worse than the Halter USX China Index, an index of U.S.-listed Chinese companies. Since August, the shares have continued to underperform. Most of the 350-odd group that we studied are now penny stocks. Considering just the 127 of those stocks whose share prices were above a buck back in August, the group's mean return over four months has been flat. The median stock in the group lost 1.7%. By comparison, the Halter Index has gained about 12% since August. The Nasdaq and the Russell 2000 have gained about 25%.
The riskiness of reverse-merged shares has as much to do with the American side of the reverse-merger business as it does with the Chinese. Consider some stocks assembled by Belmont Partners, a Washington, Va.-based investment-banking outfit. The firm says it has supplied publicly traded shell companies for more than 160 reverse-merger transactions, with a total market capitalization in excess of $2 billion. Dozens of those reverse mergers involved Chinese enterprises like China Green Agriculture (CGA) and Sino Gas Holdings (SGAS), both of which sold off sharply in 2010. Belmont Partners' founder Joseph Meuse created the Reverse Merger Association of America in 2008; the same year his firm held a conference featuring Alan Greenspan as keynote speaker.
Enlarge Image
"The leading shell provider in the U.S. !" bragged Belmont in a classified ad on a Chinese Website. "Cut out the middle man, low price guaranteed!" China reverse mergers assembled by Belmont Partners include Qingdao Footwear (QING), Buddha Steel (AGVO) and Longhai Steel (ACTN). Meuse played multiple roles in these transactions—so many, in fact, that the SEC finance division asked Longhai Steel to revise its May 2010 proxy statement to explain potential conflicts between Meuse's role as an investor in the Chinese steel-wire business and his role as chief executive of the U.S. shell company with which Longhai negotiated a merger. Meuse, who says he recently has switched the focus of Belmont Partners, recused himself from the merger vote.
Belmont Partners' point man in Shanghai starting in 2006 was William H. Luckman. As director of business development, Bill Luckman helped put together more than 40 reverse mergers. His resume before Belmont, however, might leave some investors uneasy.
The Bottom Line
As Barron's pointed out, Chinese reverse-merger stocks have proven poor performers. We'd still steer clear of this group, which has missed both Chinese and U.S. market rallies.
A decade ago, SEC filings show that Luckman was the sole officer and director in stock offerings promoted by Stephen Durland and Donald F. Mintmire. In September, Durland agreed to a permanent bar from serving at a public company, in settlement of SEC allegations that he secretly sold millions of dollars of stock through nominees at Pegasus Wireless (Barron's, "Slow Hand, Fast Hand," Sept. 4, 2006). In 2005, Mintmire was convicted on federal charges of conspiracy and obstruction of an investigation into what prosecutors called "box jobs"—stock promotions where Mintmire secretly controlled the shares of U.S. companies like Amenity Zone, which falsely listed as shareholders people his son had recruited in a bar. Luckman was not charged with any wrongdoing and could not be reached in China by Barron's. Meuse says he terminated Luckman in mid-2010.
Helping Meuse finance and arrange the shell-company transactions for Qingdao, Buddha and Longhai and many others was a Syracuse, N.Y.-based car dealer named Joseph C. Passalaqua. One of their deals was for a Passalaqua company that operates ATM machines in Syracuse strip clubs. Neither Qindao nor Buddha shares have traded lately. From an early 2010 high of $30 (split-adjusted), Longhai shares now go for $15 and the company is trying to raise $15 million in a units offering underwritten by Ladenburg Thalmann & Co.
Calling Barron's from Tibet, Meuse said he moved to China in March 2010 and retired from supplying reverse-merger shells to concentrate on private-equity investing. "I wanted to get out of the situation where you can't really control what you've got," he said of his reverse-merger deals.
E-mail: editors@barrons.com
UPDATE
SEC Charges "Shell Packagers" and Several Others in Penny Stock Scheme
FOR IMMEDIATE RELEASE
2011-262
Washington, D.C., Dec. 12, 2011 – The Securities and Exchange Commission today charged a shell packaging firm and several others involved in a penny stock scheme to issue purportedly unrestricted shares in the public markets.
Additional Materials
SEC Complaint
The SEC alleges that Joseph Meuse and his firm Belmont Partners LLC – which is in the business of identifying and selling public shell companies for use in reverse mergers – fabricated and backdated documents used to convince a transfer agent and an attorney writing an opinion letter to issue free-trading shares of Alternative Green Technologies Inc. (AGTI). The SEC also charged AGTI and its CEO Mitchell Segal as well as Segal’s business partner Howard Borg and stock promoters David Ryan, Vikram Khanna, and Panascope Capital Inc. for their roles in the scheme that resulted in unknowing investors purchasing fraudulently issued AGTI shares without the protections afforded by the securities laws.
“Shell packagers who buy and sell public companies for use by fraudsters have no rightful place in our markets,” said David Rosenfeld, Associate Director of the SEC’s New York Regional Office. “These shell packagers not only sold the shell company, but created the false documents necessary to cause the transfer agent to issue shares that should never have been sold to the public.”
According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Long Island, N.Y.-based AGTI and Segal, an attorney licensed to practice in New York, knowingly submitted false documents to a transfer agent and an attorney, who relied on them to conclude that free-trading shares of AGTI could legitimately be issued. Virginia-based Belmont Partners and Meuse aided and abetted AGTI’s fraud by knowingly creating and sometimes backdating the false documentation, including a sham assignment of debt and a fabricated and backdated corporate resolution and convertible note. Segal then used the stock certificates illegally issued to fund promotional campaigns promoting AGTI’s stock. The stock promoters – Ryan, Panascope Capital and its president Khanna – were charged with selling the unregistered securities.
The SEC’s complaint charges all defendants with violating Section 5 of the Securities Act of 1933, and AGTI and Segal with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. Segal, Meuse and Belmont Partners are charged with aiding and abetting the fraud by AGTI. The SEC’s complaint seeks permanent injunctions and disgorgement against all defendants; a financial penalty against AGTI, Segal, Belmont Partners, Meuse, and Ryan; and officer and director and penny stock bars against Segal and Meuse. The SEC’s complaint also names several relief defendants for the purposes of recovering proceeds they received from the illicit stock sales.
Borg, Khanna and Panascope Capital have consented to the entry of a final judgment enjoining them from further violations of Section 5 of the Securities Act without admitting or denying the allegations in the SEC’s complaint. Khanna and Panascope Capital agreed to pay $81,477.10 to settle the charges, and Borg agreed to pay $35,264.05 and surrender to the transfer agent for cancellation more than four million shares of AGTI stock that were illegally issued. The settlements are subject to court approval.
The SEC’s investigation was conducted by Megan Genet and Steven G. Rawlings of the SEC’s New York Regional Office. The SEC’s litigation effort will be led by Todd Brody and Megan Genet.
# # #
For more information about this enforcement action, contact:
David Rosenfeld
Associate Director, SEC's New York Regional Office
(212) 336-0153
Steven G. Rawlings
Assistant Director, SEC’s New York Regional Office
(212) 336-0149
LONGHAI Could be next. All the same players.
Guardian Securities Removed coverage on Longhai (ACTN) a few days after putting it up. Their site was cloned and hacked by unknown individuals. Guardian advised the regulators and warnings have been posted. As to Lonhai Steel, Guardian discovered to many negatives upon digging deeper and moved away from it. They took no position long or short.
Guardian Securities - Financial Services Authority
www.fsa.gov.uk/pages/.../guardian-securities.pd.
Guardian Securities Limited (Malta)claim they have removed the recommendation 2 days after they made it due to the fact they found a great deal of negative information on Longhai Steel. Turns out they were correct in removing it. Longhai Steel and its promoters who are really hyping this dubious deal have zero support in this deal. It dropped 80% on 500 shares volume one day in mid august 2011.
Stay away from this dog.
Guardian Securities Removed the Recommendation in August 2011. They have since updated. Longhai is a disaster and hopefully unwitting investors will not be hurt by this obvious distribution.
http://online.barrons.com/article/SB50001424052970203822504576048012938012584.html
Dow Jones Reprints: This copy is for your personal, non-commerical use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool on any article or visit www.djreprints.com
* See a sample reprint in PDF format
* Order a reprint of this article now
Feature
| FRIDAY, DECEMBER 31, 2010
Mergers That Don't Enrich Shareholders
By BILL ALPERT | MORE ARTICLES BY AUTHOR
Reverse Mergers of Chinese companies continue to sag
* Article
* Comments (5)
* + text size -
* print
* email
*
o Share more
o Twittertwitter
o DiggDigg
o Facebookfacebook
o LinkedinLinkedIn
o StumbleuponStumbleUpon
o YBuzzYahoo! Buzz
o MySpaceMySpace
o Deliciousdel.icio.us
o NewsVineNewsVine
o MixxMixx
* single page
* reprints
* get rss
Background image
Subscribe Now Close this window
With these readers:
My Yahoo Reader Google Reader Pluck Reader
Windows Live Reader MSN Reader Newsgator Reader
Netvibes Reader AOL Reader
Or copy the rss link:
Clarification: This storry did not make sufficiently clear that William H. Luckman had no connection with a company called Pegasus Wireless.
Correction: An earlier version of this story incorrectly said that an investment banker named William H. Luckman was the grandson of the late Chicago Bears' quarterback, Sid Luckman. They are not related.
We were on to something when we warned investors against the hundreds of Chinese businesses that had their shares listed on U.S. exchanges through the back-door technique of reverse-takeovers ("Beware This Chinese Export," Aug. 30, 2010).
The stocks have been poor performers. Two weeks ago the Wall Street Journal reported a wide-ranging investigation by the Securities & Exchange Commission, which is looking into the supply chain of stock promoters, bankers and accountants who have brought public some $50 billion worth of such stocks by merging China ventures into publicly traded American shell corporations. Congress members have vowed to hold hearings. On Dec. 20, the SEC fined a California audit firm featured in our story -- Moore Stephens Wurth Frazer & Torbet -- which agreed to a bar from auditing additional public-company clients in China, Hong Kong and Taiwan.
But that modest action by the SEC may be the only regulatory effort that investors can expect for quite a while. People with first-hand knowledge of the SEC's inquiry say that its investigators are worried about the expense of probing overseas businesses, especially because the agency can't subpoena evidence from China.
Warning Still Applies
Since our story in August, the median reverse-merged China stock has lagged the Halter index by 14 percentage points.
[reverse_c]
Investors don't need evidence of securities violations to conclude that reverse-merged China shares are lousy stocks. Our August story showed that the median performance of this type of stock was about 75% worse than the Halter USX China Index, an index of U.S.-listed Chinese companies. Since August, the shares have continued to underperform. Most of the 350-odd group that we studied are now penny stocks. Considering just the 127 of those stocks whose share prices were above a buck back in August, the group's mean return over four months has been flat. The median stock in the group lost 1.7%. By comparison, the Halter Index has gained about 12% since August. The Nasdaq and the Russell 2000 have gained about 25%.
The riskiness of reverse-merged shares has as much to do with the American side of the reverse-merger business as it does with the Chinese. Consider some stocks assembled by Belmont Partners, a Washington, Va.-based investment-banking outfit. The firm says it has supplied publicly traded shell companies for more than 160 reverse-merger transactions, with a total market capitalization in excess of $2 billion. Dozens of those reverse mergers involved Chinese enterprises like China Green Agriculture (CGA) and Sino Gas Holdings (SGAS), both of which sold off sharply in 2010. Belmont Partners' founder Joseph Meuse created the Reverse Merger Association of America in 2008; the same year his firm held a conference featuring Alan Greenspan as keynote speaker.
Enlarge Image
reverse_i
Close
reverse_i
"The leading shell provider in the U.S. !" bragged Belmont in a classified ad on a Chinese Website. "Cut out the middle man, low price guaranteed!" China reverse mergers assembled by Belmont Partners include Qingdao Footwear (QING), Buddha Steel (AGVO) and Longhai Steel (ACTN). Meuse played multiple roles in these transactions?so many, in fact, that the SEC finance division asked Longhai Steel to revise its May 2010 proxy statement to explain potential conflicts between Meuse's role as an investor in the Chinese steel-wire business and his role as chief executive of the U.S. shell company with which Longhai negotiated a merger. Meuse, who says he recently has switched the focus of Belmont Partners, recused himself from the merger vote.
Belmont Partners' point man in Shanghai starting in 2006 was William H. Luckman. As director of business development, Bill Luckman helped put together more than 40 reverse mergers. His resume before Belmont, however, might leave some investors uneasy.
The Bottom Line
As Barron's pointed out, Chinese reverse-merger stocks have proven poor performers. We'd still steer clear of this group, which has missed both Chinese and U.S. market rallies.
A decade ago, SEC filings show that Luckman was the sole officer and director in stock offerings promoted by Stephen Durland and Donald F. Mintmire. In September, Durland agreed to a permanent bar from serving at a public company, in settlement of SEC allegations that he secretly sold millions of dollars of stock through nominees at Pegasus Wireless (Barron's, "Slow Hand, Fast Hand," Sept. 4, 2006). In 2005, Mintmire was convicted on federal charges of conspiracy and obstruction of an investigation into what prosecutors called "box jobs"?stock promotions where Mintmire secretly controlled the shares of U.S. companies like Amenity Zone, which falsely listed as shareholders people his son had recruited in a bar. Luckman was not charged with any wrongdoing and could not be reached in China by Barron's. Meuse says he terminated Luckman in mid-2010.
Helping Meuse finance and arrange the shell-company transactions for Qingdao, Buddha and Longhai and many others was a Syracuse, N.Y.-based car dealer named Joseph C. Passalaqua. One of their deals was for a Passalaqua company that operates ATM machines in Syracuse strip clubs. Neither Qindao nor Buddha shares have traded lately. From an early 2010 high of $30 (split-adjusted), Longhai shares now go for $15 and the company is trying to raise $15 million in a units offering underwritten by Ladenburg Thalmann & Co.
Calling Barron's from Tibet, Meuse said he moved to China in March 2010 and retired from supplying reverse-merger shells to concentrate on private-equity investing. "I wanted to get out of the situation where you can't really control what you've got," he said of his reverse-merger deals. ?
Pump and Dump. Stock dropped 80% in August on 500 share volume.
Read the Barron's article on it and Chinese reverse Mergers
Longhai Steel looks like a total distribution or pump and dump.. Barron's ran an article on Chinese Reverse Mergers which named Longhai as one of the suspect companies. The article went on to say that all of the promoters and people involved in these revers mergers were being investigated by the SEC. These shares are not being marketed in the United States for obvious reasons. The shares dropped from $5.00 to 0.85 on 500 share volume in mid August. In July 2011 there were some immediate resignations. See third link.
Hot stocked in their article 2 days ago stated the following "It looks like the reason for ACTN lack of popularity among the trading community could be its ownership structure, and respectively its low public float. According to the company's SEC filings, over 80% of the issued capital stock (which is 10 million shares of common stock) is controlled by the company's CEO (51%), a related to him person (29%) and by the former CFO of Longhai Steel Dr. Eberhard Kornotzki (5.2%).Longhai_Steel.jpg
Interestingly, Dr. Kornotzki resigned as CFO and Director of the company in July this year. The 8-k announcing his resignation does not mention if he is still a beneficial owner of the company, but it says that two more Directors left a month after that."
http://online.barrons.com/article/SB50001424052970203822504576048012938012584.html
http://online.barrons.com/article/SB50001424052970203390704576305100837510830.html
http://biz.yahoo.com/e/110823/actn.ob8-k.html
http://www.faqs.org/sec-filings/111003/Action-Industries-Inc_8-K.A/
This stock will go up, but will also most likely drop like a rock.