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SEC Accuses SinoTech, Top Officers of Fraud [WSJ]
The Securities and Exchange Commission said SinoTech Energy Ltd. and two senior officials had misled investors by inflating the value of the company's assets. According to the SEC lawsuit, SinoTech had promised its investors it would spend a big chunk of its $120 million in proceeds from its 2010 initial public offering to buy hydraulic-drilling units important to its business. But in fact, the SEC said, the company acquired far fewer units than it said it would and grossly overstated their value—and, by extension, the value of the company itself. The SEC also alleged that Qingzeng Liu, SinoTech's chairman and controlling shareholder, secretly took $40 million from a SinoTech bank account and then stood by while SinoTech publicly made misleading statements indicating it still had that cash. The company retained Mr. Liu as chairman even though he confessed to withdrawing the $40 million, the SEC said. SinoTech has said Mr. Liu later returned the money and agreed to give up access to company funds and to SinoTech's accounting and finance functions.
Crowdfunding and the Greatest Investment Opportunity EVER!!! [Bloomberg]
There was a surprise in store last week for anyone reading the comment letters on the Securities and Exchange Commission's website about upcoming regulations related to crowdfunding: a real-life advertisement soliciting suckers (excuse me, investors) for a company trying to raise money through crowdfunding. The SEC removed the document from its website on Friday. The person who had posted it was identified on the SEC's website as Daniel E. Nelson, chairman of a Florida-based company called Rocketjet, which claims to be developing something called the "water atomic engine." The SEC is developing new regulations on crowdfunding in response to legislation enacted earlier this month that relaxes investor-protection rules in the name of making it easier for companies to raise capital from individual investors. Critics have said the new law, which Congress dubbed the Jumpstart Our Business Startups Act, is an invitation for investment scams.
‘Tainted,’ but Still Serving on Corporate Boards [DealBook/NYT]
It may be surprising that the former chief of Fannie Mae still remains the director of a public company as prominent as Goldman Sachs and Target. But perhaps more surprising, many other executives who had tumultuous reigns are also board members of major public companies: Charles O. Prince III, the former chief executive of Citigroup, who resigned under pressure in 2007 amid huge write-downs at the bank, is a director of Xerox and Johnson & Johnson. E. Stanley O’Neal, the former chief executive of Merrill Lynch on whose watch the firm loaded up on subprime debt that almost bankrupted the company, is a director of the aluminum giant Alcoa. And a number of other prominent executives could soon be added to that head-scratching list. Eduardo Castro-Wright, a vice chairman at Wal-Mart Stores who oversaw the company’s Mexico unit and was identified by a former executive there as being part of a bribery scandal that was recently uncovered by The New York Times, is a director at MetLife.
Between 2006 and 2009 while working at the nonprofit, which offers job training and support to indigent men and women throughout the city, Ling also created fake invoices and bogus ledger statements for the phantom PR firm, prosecutors say. This isn't Ling’s first run-in with the law, or the first time he yielded to temptation to acquire fancy wheels, prosecutors say. He was fired from his previous job working as an accountant for SoHo Partners after he embezzled $2,700 from the company to buy an expensive bicycle, according to the indictment. He was charged with grand larceny in that case but still managed to get hired for the ACE accountancy gig.
Sam Antar crunches some numbers: "Over the last two fiscal years, Green Mountain Coffee’s inventory turnover substantially decreased to 3.74 turns per year in the fiscal year ended September 24, 2011 compared to 4.72 turns per year in the previous fiscal year ended September 25, 2010. It took the company an average of 97.69 days to sell its inventory in fiscal year 2011 company compared to 77.36 days to sell its inventory in fiscal year 2010. In other words, it took about 22 days longer for the company sell its inventory in fiscal year 2011 than in fiscal year 2010. The above consolidated numbers appear to mask the full extent of Green Mountain Coffee’s declining inventory turnover issues. We need to remove the effects of the Van Houtte acquisition made in December 2010 (during the first quarter of fiscal year ended September 24, 2011) to make an apples-to apples comparison with the previous fiscal year. If we remove the effects of the Van Houtte acquisition, it took Green Mountain Coffee an average of 107.14 days to sell its inventory in fiscal year 2011. On an apples-to-apples basis, it took the company about 30 extra days to sell its inventory in fiscal year 2011 compared to fiscal year 2010. Therefore, it took 38% longer to sell its inventory in fiscal year 2011 after factoring out the effects of the acquisition."