More than 20 of the Chinese companies listed on the United State's exchanges have been accused of fraud, China Business News reported Monday.
About 80 percent of Chinese companies listed on the US market meet the nation's standards, but 10-20 percent of the firms provided false information, the report said, citing Stephen Paul Monticelli, president of Mosaic Investments LLC, a San Francisco-based company that has invested in Chinese firms over the past five years.
Stock prices of Dalian Rino Environment Engineering Science and Technology Co dived about 20 percent after it was reported to give false information to the US Securities and Exchange Commission this November. Now the Liaoning-based company has been sued, the report said.
Some Chinese companies employ small-size accountancy firms for auditing, which detracts somewhat from the credibility of the audit process, according to Monticelli. Market insiders also advised Chinese companies to consult a third party when going to the market.
As of December 10, 39 Chinese companies conducted initial public offerings (IPOs) on the US exchanges, according to statistics. This accounts for almost 25 percent of the total IPOs on the US market this year and exceeds the 2007 number. The figure was only 1 percent in 2000. In addition, four Chinese companies are among the top 10 US best performance IPOs in 2010, the newspaper said.