Chinese coal miner Puda Coal listed on the New York Stock Exchange (NYSE) via a reverse merger in 2005. In April 2011, short-seller GeoInvesting reported that the company's founders had sold the business to a private equity firm without informing shareholders. This caused a collapse in its share price. The board announced an independent investigation but preliminary results suggested that there were inconsistencies with public disclosures. In May, the SEC announced an investigation and in July, the company's auditors Moore Stephens resigned. In 2015, the courts set a default judgement against Zhao Ming, Puda's chairman and former chief executive Zhu Liping. The two executives were given penalties of US$250m. Macquarie was also fined US$15m for backing a share sale despite obtaining a report showing that the miner was an empty shell without any income-producing assets. Puda Coal was an example of embezzlement although the underlying asset was believed to have been real.

Last updated November 2021

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