Coop, AAGH is a US corporation operating its business in China. Therefore, it is under the auspices of the SEC and must conduct its business accordingly, as must 5% shareholders and affiliates holding holding stock. But, with all employees living in China, the SEC would have to extradite them to prosecute. Not gonna happen with a penny stock.
Paying consultants with S-8 shares and calling them employees is something the SEC has been trying to clamp down on, as it is illegal.
The SEC's literature on S-8 routinely notes two primary areas of abuse that are strictly forbidden. First, companies fraudulently issue S-8 stock to nominal employees or consultants, who then sell the shares at the direction of (and for the benefit of) the issuer. Second, Form S-8 has been misused to register securities issued to compensate advisors who then use the shares to hype and/or promote the issuer's securities. These two specific misuses have routinely led to SEC investigations and prosecutions by SEC staff. See http://www.sec.gov/litigation/admin/3-9597.htm, for a sample case.
But then again, these guys are China, and don't have much to fear from the SEC. Which is exactly my point.
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