SEC sues SinoTech, top officers for fraud

The US Securities and Exchange Commission sued SinoTech Energy (CTESY.PINK) and its officials over two separate alleged frauds, the latest in a series of crackdowns on securities violations among US-traded Chinese firms, The Wall Street Journal reported. The SEC alleged the Chinese oil-field services company and two senior officials misled investors by overstating the value of SinoTech’s assets. The company had promised investors it would spend US$120 million of its 2010 IPO proceeds to buy hydraulic-drilling units but the SEC alleged SinoTech bought far fewer units than pledged and inflated the value of the drill, thereby exaggerating the value of the company. The SEC also said Qingzeng Liu, SinoTech’s chairman and controlling shareholder, secretly took US$40 million from the company’s bank account and then feigned ignorance while SinoTech publicly claimed it had no cash. Liu has remained chairman even after confessing to withdrawing the US$40 million.