Recently, the Securities and Exchange Commission (“SEC”) charged Focus Media Holding Limited (“Focus”) and its CEO, Jason Jiang, with surrounding the partial sale of a subsidiary.
According to the press release, the China-based company and Jiang” violated an antifraud provision of federal securities laws and that Focus violated the books and recordkeeping provisions.”
Focus employees who purchased a 38% stake in Allyes Online Media Holdings Ltd. (Allyes), a subsidiary of Focus, were misinformed about the accurate value of Allyes. Unbeknownst to employees, a private equity firm was interested in purchasing Allyes. Four months after employees invested their money, the private equity firm purchased Allyes for $200 million, almost six times the amount the investors paid.
“This action against a China-based company and its CEO shows that issuers and the most senior officers will be held accountable for providing accurate information to the public, regardless of where their operations are located,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office
Jiang nor Focus admitted or denied the findings. Both parties have agreed to pay a $55.6 million settlement. A Fair Fund will also be created to return money to investors.
Core Compliance offers an extensive list of regulatory compliance services, including drafting disclosures. We tailor our services to our client’s needs, providing as much or as little assistance as necessary to help firms remain in compliance with applicable regulatory requirements. For more information on our services, this enforcement action, or other related subjects, please contact us at (619) 278-0020 to schedule a consultation.