Xinhua Finance Media's former chief financial officer, Shelly Singhal, stands accused of failing to disclose information in the offering prospectus of the companyÆs March 2007 IPO.
The offering was underwritten by JPMorgan and UBS, who are - along with Xinhua Finance Media CEO Fredy Bush - also named as defendants in the lawsuit. Proceedings began on May 27 "on behalf of all those who purchased ADSs off Xinhua Finance Media", according to information released by US attorneys Bernstein, Liebhard and Lifshitz.
Shelly Singhal is accused of witholding information concerning working simultaneously as the media companyÆs CFO, and as an investment banker and stockbroker in charge of brokerage firm Bedrock Securities. Since April 2006, prior to the company's IPO, Bedrock had been under a Nasdaq cease-and-desist order for violating SEC regulations.
As a result, Moody's has changed its outlook on the parent companyÆs B1 corporate family rating and senior unsecured bond rating to negative from stable, while Standard and PoorÆs has placed the company on credit watch with negative implications.
Investors say that the considerable fluctuations in Xinhua FinanceÆs bonds over the last week indicates that there is a lot of fast money in the market.
Xinhua Finance specialises in financial information and media services. The company is headquartered in Shanghai, with a global network spanning 19 locations across North America, the Asia-Pacific, and Europe. Its subsidiary, Xinhua Finance Media, is a financial and entertainment media company, offering services through advertising, broadcast, print, production and research.
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