June 13 (Bloomberg) -- The U.S. Securities and Exchange Commission, as part of a broader probe of China-based firms listed on U.S. exchanges, moved to halt new share offerings in two companies after their independent auditors resigned.
SEC investigators claimed that China Intelligent Lighting and Electronics Inc. and China Century Dragon Media Inc. failed to disclose that their independent auditors had withdrawn after questioning the accuracy of the companies’ financial statements, according to two separate orders released today. The SEC is seeking a so-called stop order to prevent the companies and shareholders from selling stock under the faulty statements, the agency said in a statement.
The SEC formed a task force last year to investigate China- based firms trading in the U.S. amid concerns that some might be doctoring financial statements to lure investors. The agency and exchanges have halted trading in more than a dozen firms since the probe began.
The auditor for Guangdong-based China Intelligent Lighting and Electronics quit on March 24, citing accounting fraud involving forged bank statements, according to a June 10 SEC order made available today. The firm didn’t disclose the auditor’s claims until April 12, according to SEC investigators. In a separate order dated today, SEC lawyers said China Century Dragon Media made misleading statements after the company’s auditor resigned, citing an inability to verify bank records.
Phone calls to Michael Quinn, an attorney for China Intelligent Lighting and Electronics at K&L Gates, and Thomas Wardell, China Century Dragon Media’s lawyer at McKenna, Long & Aldridge LLP, weren’t immediately returned.
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