The SEC said that the accused firm, which claims to manage a television advertising network on inter-city and airport express buses in China, started incorrectly reporting considerable raise in its business operations, financial condition, and profits.
Due to gross misrepresentation of facts, its stock price tripled to more than $20 per share and the company received $53m from a hedge fund pursuant to a sale of the company’s preferred and common stock to that fund.
In public filings and press releases signed by its CEO Zheng Cheng, the company illegally mentioned that two multi-national corporations were its advertising clients.
SEC division of enforcement associate director Antonia Chion said, "China MediaExpress and Zheng falsely reported whopping increases in its cash balances and deceptively raised money from stock sales."
The SEC’s complaint filed in Washington DC charges Zheng and China MediaExpress with violations of the antifraud provisions of the federal securities laws, including reporting, books and records, and internal control provisions.
The US watchdog has sought financial penalties, permanent injunctions, disgorgement, and an officer and director bar against Zheng.
