SEC Sues China-Based Oil Firm Over Claims It Overvalued Assets
The U.S. Securities and Exchange Commission sued a China-based oil field services company and two senior executives over claims they deliberately misled investors about the value of its assets and the use of $120 million from its 2010 initial public offering.
SinoTech Energy Ltd. (CTESY) told investors that the company purchased $94 million worth of lateral hydraulic drilling units when it had actually only bought $17 million worth, the SEC said in a complaint filed today at U.S. District Court in the western district of Louisiana.
The company’s chairman was accused in the complaint of siphoning $40 million in company funds. SinoTech didn’t record the chairman’s withdrawal of company funds and kept him as chairman even after he admitted to the conduct, according to the SEC.
“SinoTech’s brief life as a public company in the U.S. markets has been rife with falsehoods,” David Woodcock, head of the SEC’s Fort Worth, Texas, office in said in a statement. “Investors deserve the utmost honesty and transparency from companies and their officers when they tap public markets.”
Steven Schatz, an attorney for SinoTech at Wilson Sonsini Goodrich & Rosati, declined immediate comment.
The SEC is seeking unspecified financial penalties and industry bars against the individuals.
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