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U.S. SEC charges China Sky One with securities fraud

by fwire  Sep 5, 2012 01:45 IST

#Business   #NewsTracker   #Technology  

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission charged China Sky One Medical Inc (CSKI.PK) and its chief executive with securities fraud and said the company recorded fake sales of a weight loss product.

China Sky One inflated revenues in its financial statements by booking $19.8 million in phony export sales, the SEC said.

The company, based in China, said in 2007 securities filings it had entered into a distribution agreement with a Malaysian company that would generate the sales, but never entered into such an agreement, the SEC said on Tuesday.

The company's chief executive, Yan-qing Liu, certified the overstated financial results, which appeared in financial statements through 2010, the SEC said.

A lawyer for the company did not immediately respond to a request for comment. The CEO could not be immediately reached for comment.

The case is the latest in a series of actions the SEC has taken against Chinese companies listed in the U.S.

Dozens of such companies, which often go public by merging with shell companies, have disclosed auditor resignations or bookkeeping irregularities.

China Sky One went public in the U.S. through a reverse merger in 2006, the SEC said.

The company's auditor, MSPC, resigned in March after one of the company's directors resigned and said he was having trouble getting in touch with the company's finance executives.

(Reporting By Aruna Viswanatha; Editing by Gerald E. McCormick and Phil Berlowitz)

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