Feeds

Feds probe triggers Chinese tech stock tumble

DOJ joins SEC and FBI in irregularities inquiry

High performance access to file storage

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. ®

High performance access to file storage

More from The Register

next story
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.