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- Title
MISMATCHED REGULATORY REGIMES: HOW CHINESE REVERSE MERGERS—AND CHINA MEDIAEXPRESS HOLDINGS, INC.—EVADED SCRUTINY THROUGH REGULATORY CONFLICTS AND LOOPHOLES.
- Authors
TENG, TERESA A.
- Abstract
As a result of a growing Chinese economy and the need to access capital, Chinese Reverse Mergers (CRMs) became a popular phenomenon in recent years. However, due to financial reporting problems on the part of CRMs and a lack of U.S Securities and Exchange Commission (SEC) disclosure requirements for companies accessing stock exchanges through a reverse merger, many CRMs quickly collapsed amid claims of fraud. The U.S. market reacted to these claims with the New York Stock Exchange and NASDAQ quickly halting trading or delisting several CRMs, and the SEC beginning to conduct formal investigations. In 2011, CRMs were the target of onequarter of all federal securities class actions. One of these companies, China MediaExpress Holdings, Inc., purported to sell television advertisements on a number of inter-city buses in China, but several investigations brought to light allegations of inflated earnings and fraud concerning the number of advertisements employed. This Note will provide background on Chinese Reverse Mergers, perform a case study on the China MediaExpress case, and explore divergences and loopholes in the Chinese and U.S. regulatory regimes that have allowed China MediaExpress and other CRMs to slip through the cracks.
- Subjects
REGULATORY crime; REVERSE mergers; LOOPHOLES; CHINA MediaExpress Holdings Inc.; SECURITIES fraud -- Law &; legislation; ACTIONS &; defenses (Law)
- Publication
New York University Journal of Law & Business, 2014, Vol 11, Issue 2, p397
- ISSN
1558-5778
- Publication type
Article