CME, China’s largest television mobile-advertising operator was listed on NASDAQ in 2009 using a reverse merger. In February 2011, evidence emerged of fraud at CME.
In addition to massively overstating its cash balances, China MediaExpress falsely stated in public filings and press releases that two multi-national corporations were its advertising clients when, in fact, they were not. The company’s chairman and CEO Zheng Cheng signed the public filings and attested to their accuracy. After suspicions of fraud were raised by the company’s external auditor and an internal investigation ensued, Zheng attempted to bribe the senior accountant assigned to the case.
CME’s independent auditor Deloitte Touche Tohmatsu resigned, with Deloitte publicly declaring “it was no longer able to rely on the representations of management.” NASDAQ suspended CME from trading in April 2011 and decided to fully delist CME in December 2011.
OPM was 61% in 2010 (90th percentile)
Citron Research: The China Reverse Merger stock that is “Too Good to be True”, 30 Jan 2011
Muddy Waters: China Media Express Holdings, 2 Mar 2011