Merrill Settles on Longtop -- WSJ
March 09 2018 - 03:02AM
Dow Jones News
By Michael Rapoport
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 9, 2018).
Bank of America Corp.'s Merrill Lynch unit agreed Thursday to
pay $1.4 million to settle Securities and Exchange Commission
allegations that it didn't do enough to investigate red flags at a
Chinese company whose unregistered securities it sold.
Merrill sold almost three million unregistered shares of
financial-software company Longtop Financial Technologies Ltd. in
2011, the SEC said, even though it was aware of multiple questions
about Longtop.
The red flags included a purported "gift" of the shares before
the sale that might have not been valid; accusations of fraud at
the company, and the resignation of the company's auditor, which
cited questions about Longtop's finances, the SEC said.
A Merrill spokesman said the firm was "pleased to resolve this
matter" and noted the Longtop sales were executed through an
international wealth-management business that Merrill has since
sold. It didn't admit or deny the SEC's allegations in agreeing to
the settlement.
The sales generated almost $38 million in proceeds for Longtop
and its affiliates, the commission said. Merrill is paying a $1.25
million fine plus disgorgement and interest.
The SEC has filed a number of cases in recent years against
financiers, auditors and other "gatekeepers" who helped Chinese
companies gain access to U.S. markets.
Many of the Chinese companies later encountered questions from
regulators about their accounting or disclosure, and U.S. investors
lost billions of dollars when their stocks tumbled as a result.
Longtop representatives couldn't be reached for comment. The SEC
revoked Longtop's registration to trade in the U.S. in December
2011.
Write to Michael Rapoport at Michael.Rapoport@wsj.com
(END) Dow Jones Newswires
March 09, 2018 02:47 ET (07:47 GMT)
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