Feeds

Feds probe triggers Chinese tech stock tumble

DOJ joins SEC and FBI in irregularities inquiry

Internet Security Threat Report 2014

Chinese tech companies' stock has been sliding on the NASDAQ today, after a report that the US Department of Justice (DOJ) is investigating accounting irregularities at US-listed Chinese firms.

Youku, the Chinese YouTube, was particularly hard hit, down 18.3 per cent to $16.24, while search behemoth Baidu lost 9.17 per cent and online media company Sina dropped 9.7 per cent. Other Chinese stocks listed on US exchanges dropped as well.

The Securities and Exchange Commission (SEC), with the help of the FBI, has already had its nose in a number of Chinese firms, looking at the accounting practices of those who got on the market through a reverse merger. This is where a private company acquires a public shell company and reverse merges into it, thereby getting a listing without having to go through the long process of going public.

Around 25 Chinese companies have disclosed discrepancies in their filings or seen their auditors withdraw in the first half of this year, adding fuel to the fire.

The entry of the DOJ into the investigation could mean that criminal charges might be brought as well as civil proceedings. However, the US does not have an extradition treaty with China, so any criminal charges could prove difficult to prosecute.

"There are parts of the Justice Department that are actively engaged in this area," Robert Khuzami, director of enforcement at the SEC, told Reuters in an interview.

He added that a number of federal prosecutors around the US were taking part in the investigation, but didn't name them. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.