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Macquarie Fined $19m by US SEC Over Chinese Stock Sale

Macquarie Fined $19m by US SEC Over Chinese Stock Sale
Mar 30, 2015 By Matthew Dibb

Macquarie Group (ASX:MQG) has been ordered to pay $19.2m by the US Securities and Exchange Commission after settling charges that claimed it misled investors who bought shares of China’s Puda Coal. The US SEC said in the settlement on Friday that Macquarie underwrote a public offering “despite obtaining a due diligence report indicating that the China-based company's offering materials contained false information.” In 2012, the SEC charged both the CEO and chairman of Puda with fraud, alleging that some of the company’s executives had mislead the market to invest in an empty shell company rather than directly investing in an actual coal business. The SEC reported that Puda “purported to own a coal company in China” when in fact they did not. Macquarie Group made $US4.17m from its underwriting. In addition to the fine, the company will also set up a fund to cover the costs of investors who suffered a loss after purchasing shares in the public offering of Puda Coal.

The SEC also fined former Macquarie managing director Aaron Black, and his investment banking associate William Fang, after they failed to exercise appropriate care of the due diligence report that showed Puda did not in fact own a 90 per cent stake in a coal company. None of the defendants admitting to any wrongdoing. Puda Coal was formerly trading on the New York Stock Exchange but now the company is no longer in business. Shares of MQG are down 98c, or 1.27 per cent, at 76.31 per share on Friday. Despite the recent settlement with the SEC, shares of MQG have advanced over 32 per cent in the past 12 months. The shares are also up 31 per cent so far this year.


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Matthew Dibb Author: Matthew Dibb Mar 30, 2015

Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.

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