Update on PUDA Coal
Feb 22, 2012
Posted by Jody Eisenman | Filed under Uncategorized
PUDA Coal is one of several Chinese reverse mergers that came into the public markets in the last few years. I wrote about it back in April of last year.
At the time, I stated that “Puda Coal had a small problem. PUDA owns an operating subsidiary called Shanxi Coal, which comprises the vast majority of the company’s business. Unbeknownst to the shareholders, the chairman of the company secretly transferred control to a Chinese investment trust and himself back in 2009. Somehow, the auditors never figured this out”.
The SEC launched an investigation. Today, they released their findings which charged two executives with fraud. Specifically, U.S. securities regulators on Wednesday charged two China-based Puda Coal executives with fraud, saying they led investors to invest in an empty shell company instead of an actual coal business.
The Securities and Exchange Commission’s civil suit, filed in a Manhattan federal court, alleges the company’s Chairman Ming Zhao and former CEO Liping Zhu tried to “steal and sell” Puda Coal’s coal mining company Shanxi Puda Coal Group, the company’s only source of revenue.
The complaint claims that Zhao transferred a controlling interest to himself, and then sold a substantial portion to a fund.
