By Aruna Viswanatha
WASHINGTON, Feb 28 (Reuters) - Keyuan Petrochemicals Inc
, a China-based petrochemical company, agreed to pay $1
million to settle securities fraud charges in the United States,
as regulators have stepped up efforts after misconduct at
U.S.-listed Chinese companies.
The Securities and Exchange Commission accused the company,
whose shares traded in the U.S. through a so-called reverse
merger, of failing to disclose to investors related-party
transactions involving its chief executive and others.
The SEC also accused the company of maintaining an
off-balance-sheet account to pay bonuses to senior officers and
fund other expenses.
The company's former finance chief, Aichun Li, agreed to pay
a related $25,000 penalty. Neither Keyuan nor Li admitted or
denied the charges, the SEC said.
Lawyers for the company and for Li did not immediately
respond to requests for comment.
In the past two years the SEC has launched probes into
possible accounting fraud at dozens of Chinese companies, many
of which tapped the U.S. public markets through the backdoor
route of merging with a shell company, a process known as a
But the agency has struggled to develop the cases as it
faces difficulties in obtaining documents related to the
In December, the SEC charged the Chinese arms of the five
largest accounting firms with securities violations over their
failure to produce related audit work papers. The firms have
said they are prevented from doing so by Chinese state secrecy
Other securities fraud cases the SEC has filed against
China-based companies remain pending, and most have not yet
resulted in settlements.
Nasdaq suspended trading in Keyuan shares in October 2011,
and delisted them in April 2012. The company's shares continue
to trade in the over-the-counter market.
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