The Securities Exchange Commission charged a South San Francisco-based Solar company with fraud last Thursday.
The SEC alleged that the company, Worldwide Energy and Manufacturing (WEMU), defrauded its investors by transferring nearly half of the ownership of the company's Chinese subsidiary, to three top managers in China, without informing its investors.
According to the SEC, the company raised about $9 million from investors in 2010 in order to expand that subsidiary, based in Rugao City, China. The subsidiary accounted for most of the company's operations and revenue, and the company planned to build a new factory in China to manufacture solar panels.
An SEC press release reported that:
"In a power point presentation at road shows and in other communications with investors, the company’s founder and chairman of the board Jimmy Wang and the company’s president Jeffrey Watson touted the solar subsidiary’s success as the primary growth area for the company and represented that the company fully owned its Chinese subsidiary. They neglected to tell investors that WEMU actually was set to transfer 49 percent of the equity in the Chinese subsidiary to its three managers."
WEMU did not admit or deny the allegations, but agreed to a settlment of $100,000 penalty and the condition to be permanently enjoined from future antifraud violations.
President of the Board Jimmy Wang, his wife Mindy Wang, and the company's president, Jeffrey Watson agreed to permanent bars from serving as officers or directors of a public company.
Watson and Mindy Wang, who was also directly involved in the fraud, agreed to $50,000 penalties.
For more business news, sign up for our daily newsletter | Like South City Patch on Facebook | Follow South City Patch on Twitter | Blog for South City Patch
