Washington, Sep 27: The US Securities and Exchange Commission (SEC) Thursday charged two former executives of China-based ChinaCast Education Corporation with fraud and insider trading.
The SEC charged Chan Tze Ngon, ChinaCast’s former chief executive officer (CEO), with illicitly transferring $41 million to a purported subsidiary in which he secretly held a controlling 50 percent ownership stake, Xinhua reported.
The SEC also alleged that Jiang Xiangyuan, ChinaCast’s former president for operations in China, avoided more than $200,000 in losses by illegally selling about 50,000 ChinaCast shares after transferring some of the company’s assets.
“The massive fraud perpetrated by Chan destroyed hundreds of millions of dollars in market value, and Jiang’s brazen insider trading allowed him to profit by dumping his own shares on the market before the fraud was exposed,” said Andrew Calamari, director of the SEC’s New York regional office.
ChinaCast, a post-secondary education and e-learning services provider in China, entered US capital markets through a reverse merger in December 2006 and its common stock was listed on Nasdaq from October 2007-June 2012, according to the SEC’s complaint filed in a federal court in Manhattan.