<p>"One of China's least-noticed exports to the US has been hundreds of Chinese companies that slipped onto US stock exchanges through back-door mergers with dormant shell companies," the Wall Street Journal has reported.<br /><br />According to the publication, many of these entities have minimal revenues, questionable accounting and inscrutable corporate governance.<br /><br />Quoting people with knowledge about the probe, the daily said the SEC has begun a crackdown on practices of the "reverse takeover" market for Chinese listings.<br />The market regulator has initiated investigation into how networks of US accountants, lawyers and bankers have helped bring many Chinese firms on to the US stock markets, it added.<br /><br />SEC has also started focusing on individual Chinese companies for accounting violations and lax auditing practices.<br /><br />"... the House financial-services committee is also revving into gear and may hold hearings on Chinese-company accounting in 2011... The committee's fear is that some companies are rife with self-dealing and potential fraud and weak international standards have let it go largely undetected," the report noted.</p>
<p>"One of China's least-noticed exports to the US has been hundreds of Chinese companies that slipped onto US stock exchanges through back-door mergers with dormant shell companies," the Wall Street Journal has reported.<br /><br />According to the publication, many of these entities have minimal revenues, questionable accounting and inscrutable corporate governance.<br /><br />Quoting people with knowledge about the probe, the daily said the SEC has begun a crackdown on practices of the "reverse takeover" market for Chinese listings.<br />The market regulator has initiated investigation into how networks of US accountants, lawyers and bankers have helped bring many Chinese firms on to the US stock markets, it added.<br /><br />SEC has also started focusing on individual Chinese companies for accounting violations and lax auditing practices.<br /><br />"... the House financial-services committee is also revving into gear and may hold hearings on Chinese-company accounting in 2011... The committee's fear is that some companies are rife with self-dealing and potential fraud and weak international standards have let it go largely undetected," the report noted.</p>