Barron's on Chinese reverse IPOs in the US

Same old modus operandi as what happens in HK. Companies with 3year records under perform by over 70% - the spruikers have already cut and run.

- False financial statements
- Suspect auditors
- Investment banker/hedge fund assholes too eager to get in early

Beware This Chinese Export
Barron's 8/30
By Bill Alpert and Leslie P. Norton

"These companies fall between the cracks of market regulation. The SEC's enforcement staff can't subpoena evidence of any fraudulent activities in China, and Chinese regulators have little incentive to monitor shares sold only in the U.S."

"The Public Company Accounting Oversight Board, established under the Sarbanes-Oxley Act to police auditors, recently warned against lax auditing of U.S.-listed Chinese businesses. The PCAOB plans to ask Congress to lift restrictions on the disclosure of its disciplinary proceedings against accountants. China is one of several nations that won't let the PCAOB inspect the local auditors used by U.S.-listed companies."

"As the "auditor of auditors," the PCAOB has sounded an alarm over the auditing of overseas businesses. A July 12 practice alert noted with concern that 40 accounting firms with five or fewer partners had rendered opinions on companies with China-based operations."