US securities regulators moved to stop two Chinese companies from selling their private shares to investors on Monday, in their latest effort to crack down on questionable financial statements by overseas companies. The Securities and Exchange Commission said it had begun so-called "stop order proceedings" against China Intelligent Lighting and Electronics Inc and China Century Dragon Media Inc.
Both companies had trading suspended in their publicly-held stock on NYSE Amex in March, and the exchange has initiated a delisting proceeding against them. The SEC decided to institute the stop order against the companies to prevent them from selling their shares privately after the independent auditors for both companies withdrew their audit opinions and resigned. Since last year, the SEC has been actively probing accounting and audit problems that have arisen with companies headquartered in China, Hong Kong and other countries that seek to access to US capital markets. Many of these have gained that market access through reverse mergers with US shell companies. The probe has led to numerous trading suspensions, often amid auditor resignations.
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