China Century Dragon Media Inc. (CDM) said MaloneBailey LLP
formally resigned as the company's independent accounting firm,
alleging it believed irregularities in the company's bank records
suggested the documents may have been falsified.
The Chinese television advertising company said the firm noted
in its resignation letter that it couldn't directly verify the
company's bank records and wasn't able to rely on management's
representations of China Century's financial statements. The
company said it intends to seek and retain a new auditor.
Additionally, China Century, which launched its initial public
offering in February, said the New York Stock Exchange has
determined it is not in compliance with the exchange's listing
standards, and is therefore subject to immediate delisting. The
company intends to appeal that decision.
China Century, which primarily offers blocks of advertising time
on China Central Television channels, also disclosed it was
notified by the U.S. Securities and Exchange Commission that it has
initiated an investigation into whether it made "material
misstatements or omissions" in its financial statements, including
cash accounts and accounts receivable. The SEC served the company
with a subpoena on Thursday for documents related to the review,
and China Century said it is cooperating with the agency.
In light of the events, China Century's board has formed a
special investigation committee. The company said its annual report
filing would be delayed until the completion of the internal
investigation, as well as the hiring of a new auditor and an audit
of the company's financial statements.
China Century is the latest Chinese company to disclose woes
related to allegations of misrepresentation and issues concerning
regulatory filings in the U.S. Earlier Monday, The New York Stock
Exchange's regulator said it would suspend trading of Duoyuan
Printing Inc. (DYP) as it hasn't been able to bring its filings
with the Securities and Exchange Commission up to date. China Shen
Zhou Mining & Resources Inc. (SHZ) and China Education Alliance
Inc. (CEU) have also caught heat in recent months.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com
