Monday, June 13, 2011

SEC Press Release: Efficacy of Registration Statements

Stop Order Proceedings Instituted Against China Intelligent Lighting and Electronics, Inc., and China Century Dragon Media, Inc.

The Securities and Exchange Commission (SEC) issued a press release today announcing that
it has instituted proceedings to determine whether stop orders should be issued suspending the effectiveness of registration statements filed by two companies – China Intelligent Lighting and Electronics Inc. (CIL) and China Century Dragon Media Inc. (CDM).
The press release provides the SEC Order in the Matter of CIL and the SEC Order in the Matter of CDM.

The proceedings were instituted after the independent auditor of the companies allegedly resigned and withdrew its audit opinions. The SEC’s Department of Enforcement alleges that the auditor left CIL as a result of accounting fraud including forged bank statements and accounting records, while the auditor left CDM due to “discrepancies noted on customer confirmations and the auditor’s inability to directly verify the Company’s bank records.” The Department of Enforcement therefore alleges that CDM’s registration statements are materially misleading and deficient.

Stop orders on a company prevent the company and its shareholders from selling shares if the registration statements are materially misleading and deficient. They are intended to protect the investing public.

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