Starr International Co., a firm run by former American International Group Inc. Chief Executive Officer Maurice "Hank" Greenberg, sued China MediaExpress Holdings Inc. (CCME) and its auditor Deloitte Touche Tohmatsu, saying it was fraudulently induced into investing about $13.5 million.
The suit from Starr Investments Cayman II Inc., filed in U.S. federal court in Delaware on March 18, says Hong Kong-based China MediaExpress misrepresented its business and finances. Chief Executive Officer Zheng Cheng and Chief Financial Officer Jacky Lam were also named in the suit. Lam quit this month.
Greenberg, through Starr International and C.V. Starr & Co., is the third-largest China MediaExpress holder with 4.55 million shares, according to data compiled by Bloomberg. Starr International purchased about 1.5 million shares in October, then valued at about $13.5 million. Shares of China MediaExpress, which says it provides advertising on buses in China, have been halted in the U.S. since March 11 after plunging 48 percent in six weeks. The company said March 14 that Deloitte Touche Tohmatsu resigned.
China MediaExpress is one of about 370 Chinese companies that obtained U.S. listings since 2004 without the rigors of initial public offerings.
Starr also started arbitration proceedings in Hong Kong against China MediaExpress on March 17, according to the complaint. “Even if CCME should prove not to be a fraud, plaintiff purchased CCME’s securities at artificially inflated prices and was damaged thereby,” the document said, referring to China MediaExpress by its stock symbol.
China MediaExpress didn’t respond to an e-mail message sent to its investor relations department outside regular business hours in Hong Kong. Jake Sokol, a C.V. Starr spokesman, declined to comment.
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