China-focused fund manager settles with U.S. SEC

SEC-SIRIS:China-focused fund manager settles with U.S. SEC

A hedge fund manager known for his bullish bets on Chinese companies and two of his firms have agreed pay $1.1 million to settle allegations by U.S. securities regulators of "wide-ranging" misconduct including insider-trading and misleading investors.

The Securities and Exchange Commission on Monday said that Peter Siris, an author who invests in Chinese reverse mergers listed in the United States and offers consulting services, broke numerous laws mostly in connection with his involvement with China Yingxia International, a company that collapsed in 2009 amid reports its chief executive had committed fraud.

Siris and his firms Guerrilla Capital Management and Hua Mei 21st Century agreed to settle the SEC's lawsuit without admitting or denying the allegations that also included illegal short-selling and the selling of unregistered securities.

Separately, the SEC also on Monday charged five other individuals and one firm for alleged violations related to China Yingxia. Several of the individuals settled the case without admitting or denying the charges.

For more than a year now, the SEC and the U.S. Justice Department have been investigating accounting irregularities at U.S.-listed companies based in China as dozens of them began disclosing auditor resignations or bookkeeping irregularities.

Many of these companies have gained access to the U.S. capital markets through a backdoor approach known as a "reverse merger" in which U.S. shell companies merge with foreign companies.

Most of the SEC's enforcement actions so far have centered on the companies and their executives, or the companies' auditors. This marks one of the first instances where the SEC has gone after an investor and consultant in connection with troubled reverse mergers.

Siris is a long-time investor in Chinese stocks listed on Western exchanges, and has written a column about investing in those companies for the New York Daily News.

A lawyer for Siris could not immediately be reached for comment.

Siris launched his China-focused fund in 2007, and launched Guerrilla Capital Management in 1999.