SEC charges consultant with fraud in Chinese reverse mergers

(Reuters) – Securities regulators charged a New Jersey-based consultant on Tuesday with defrauding investors in the China-based companies he helped make public through a backdoor method known as a “reverse merger.”

The Securities and Exchange Commission charges against Huakang “David” Zhou and his firm, Warner Technology and Investment Corporation, is the latest action by the SEC as cracks down following a rash of accounting scandals at U.S.-listed Chinese companies.

Last week, the SEC went after the China affiliates of top accounting firms over their refusal to produce certain audit papers for U.S.-listed Chinese companies.