Shareholders of China firm sue auditor in U.S.

BEIJING (Caixin Online) � Ten shareholders of a Chinese company delisted from the Nasdaq have filed a lawsuit against the company�s auditor in a U.S. court in New York.

They are seeking compensation equivalent to the difference between the cost of buying the shares and the present value, said Derek Feng Yiyi, chairman of delisted ChinaCast Education Corp. CAST

The exact amount being sought in the U.S. District Court in Manhattan wasn�t known yet. The company�s auditor, the Chinese arm of global auditing firm Deloitte Touche Tohmatsu, declined to comment on the matter, but said it would issue a statement later.

�About Caixin
Caixin is a Beijing-based media group dedicated to providing high-quality and authoritative financial and business news and information through periodicals, online and TV/video programs.
� Get the Caixin e-newsletter /conga/story/misc/caixin.html61611

ChinaCast went public in the United States through a reverse-merger in 2007. It was forced to leave the Nasdaq in June after a former executive apparently gutted the firm�s assets.

The firm�s shares are now trading on the Pink Sheet market, an over-the-market trading platform in the United States, at $0.11 per share. At their peak in 2009, the shares were trading at more than $8.

The trouble started in 2011 when Feng�s predecessor, ex-chief executive officer and chairman Chen Zi�ang, was ousted as part of an executive shake-up initiated by the company�s American shareholders.

Click to Play U.S. renews pressure on China for corporate spying

The White House unveiled a new strategy to exert pressure on China and other countries that engage in corporate espionage against the U.S.

In the weeks before Feng�s appointment in March 2012, several hundred million yuan USDCNY �was transferred from company accounts without the approval of the board of directors. The company�s business license, registration seals, and accounting and computer records vanished as well.

In February, Deloitte said its attempts to check the books at the company�s Shanghai office had been blocked by the company�s employees, and it hadn�t been paid.

ChinaCast said in December 2012 that all quarterly and annual financial statements between the beginning of 2009 and the end of September 2011 couldn�t be trusted.

The announcement also revealed other problems at the firm, including loss of control of equity in subsidiaries and a great amount of assets that didn�t exist.

Read this report on Caixin Online.