'Surprise' messagefrom Barron's online
U.S. regulators seem to have struck a rich field on which to focus their enforcement efforts.
Just a week after the Securities and Exchange Commission charged a Chinese company with fraudulently recording sales, the Public Company Accounting Oversight Board banned an accountant who once worked for Chinese companies. Both cases involved Chinese reverse mergers. In these transactions, a Chinese company usually buys a largely defunct U.S. company that has retained its corporate status. As a result, the Chinese outfit gets an equity listing without providing all the disclosure needed in a traditional initial public offering.
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CloseWilliam Waitzman for Barron's
Crackdown: The PCAOB, an accounting regulator, launched its fourth China-related enforcement action of the year.
.The PCAOB brought its enforcement action against Michael T. Studer, president of the Studer Group, an accounting firm with offices in Freeport, N.Y., and Vancouver, British Columbia. The accounting group has banned Studer from preparing an audit report for a securities issuer for three years. Barron's mentioned Studer in a story, "Who's Minding the Minders of Chinese Accounting?" (Feb. 18, 2008) that also cited the target of the SEC action. Studer audited companies such as China Clean Energy (CCGY) and China Kangtai Cactus Bio-tech (CKGT), we noted in our story, despite previous PCAOB issues and securities regulatory actions against him.
The PCAOB's new moves against Studer, its fourth China-related action this year, say Studer failed to comply with its auditing standards for China Clean, China Kangtai, and another company that isn't Chinese. Studer didn't respond to requests for comment. Attempts to reach China Clean and China Kangtai were unsuccessful.
