SEC cracks down on Seattle-based Chinese coal company
The US Securities and Exchange Commission (SEC) has charged coal company L&L Energy (NASDAQ:LLEN) of fraud.
The SEC alleges that the Seattle-based firm and its founder made false disclosures about who was running the company.
L&L, which has all of its operations in China and Taiwan, created the “false appearance” that it had a a professional management team in place when in reality one single person was running the whole Seattle-operation, SEC investigators claim.
According to the SEC, a person named Dickson Lee was “single-handedly controlling the company’s operations.”
“An L&L Energy annual report falsely listed Lee’s brother as the CEO and a woman as the acting CFO in spite of the fact that she had rejected Lee’s offer to serve in the position the month before,” the SEC wrote in a statement. “L&L Energy and Lee continued to misrepresent that they had an acting CFO in the next three quarterly reports.”
“Lee and L&L Energy deceived the public by falsely representing that the company had a CFO, which is a critical gatekeeper in the management of public companies,” Antonia Chion, associate director in the SEC’s Enforcement Division, said in a statement.
On its website, L&L describes itself as an “American company in the business of producing, processing, and selling coal in the People’s Republic of China,” with a vision to “become a leading player in the government-mandated consolidation of the fragmented coal industry in China.”
The investigation into L&L is part of an SEC initiative to look into companies with substantial foreign operations. Through the Cross-Border Working Group, the SEC has filed fraud cases against more than 90 companies, executives, and auditors. The securities of more than 60 companies have been deregistered as a result.
The US Attorney’s Office in the Western District of Washington is pursuing a parallel criminal case against Lee.
Trading of the company’s stock was halted in November 2013.