SEC Warns Investors About Reverse Merger Hazards

Law360, New York (June 9, 2011, 5:08 PM EDT) -- Securities regulators warned investors Thursday about risks associated with buying shares of shell companies formed to engage in reverse mergers, citing recent problems involving Chinese companies that went public through that process.

In a bulletin posted to the agency's website, the U.S. Securities and Exchange Commission said it has suspended trading in several reverse merger entities within the past few months, including six China-related companies, largely for accounting irregularities and other troubles.

“As with any investment, investors should proceed with caution when considering whether to invest...
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