Subaye, Inc. offers video sharing services in China. The Company offers production, upload, storage, sharing and publishing onto video sharing portal websites.
The U.S. Securities and Exchange Commission sued Subaye Inc. for fraud, saying the Chinese video-advertising and entertainment company misled investors about its financial prospects and revenue.
The SEC said Subaye agreed to settle the matter without admitting or denying the allegations against it. The Beijing-based company also consented to a final judgment barring any further securities law violations, the agency said.
“Through its public filings and announcements, Subaye repeatedly made misrepresentations to prospective investors,” the SEC alleged. “Subaye falsely promoted itself as an up-and-coming company with a bright future, millions of dollars in revenue and vibrant business operations.”
In SEC filings and in statements issued to investors, Subaye made claims of rapid growth in sales and operations, claiming in 2010 to have more than 1,400 sales and marketing employees. It reported revenue of $39 million for its 2010 fiscal year and projected more than $71 million in revenue in 2011.
In a December 2010 press release and regulatory filings, Subaye reported $22 million in “marketing expenses,” which the company attributed to a “strategic decision to dramatically increase our marketing expenses in new markets.”
SEC: Litigation Release, 21 Oct 2014
Bloomberg: SEC Sues Chinese Video-Sharing Company Subaye for Fraud, 09 May 2013
SouthChinaMorningPost: Subaye’s shares plunge on resignation, 09 Apr 2011
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