reporter2
14-09-21, 20:24
Companies Tied to Chinese Exile Guo Wengui to Pay $539 Million to Settle SEC Action
Regulator says companies violated investor-protection laws
https://i.imgur.com/KJEY4oK.jpg
Guo Wengui, seen in 2017 in New York, is a former real-estate developer who fled China a few years ago.
Sept. 13, 2021
WASHINGTON—Three media companies tied to exiled Chinese businessman Guo Wengui have agreed to pay $539 million to settle regulatory claims they violated investor-protection laws when they raised money from over 5,000 investors.
The Securities and Exchange Commission said the agreement resolves an investigation it began last year into whether the sale of stock and digital assets complied with rules meant to protect small investors. The companies said the money they raised would be spent to build a news and social-media platform that would be “the only uncensored and independent bridge between China and the Western world,” according to the fundraising documents.
The three businesses—GTV Media Group Inc., Saraca Media Group Inc. and Voice of Guo Media Inc.—settled the SEC’s probe without admitting or denying wrongdoing. The total monetary sanctions include over $480 million that must be repaid to investors and $35 million in fines, the SEC said.
Mr. Guo, a former real-estate developer who fled China a few years ago, has portrayed himself as a wealthy dissident of the Communist Party. After taking up residence in New York, he used a partnership with former Trump political adviser Steve Bannon to build a large online following. In China, he is considered one of the country’s top fugitives and has faced longstanding allegations of money laundering, fraud and other crimes, all of which he has denied, and has applied for asylum in the U.S.
For more than a year, investors in the companies have complained that they couldn’t get their money out. The issue escalated after supporters of Mr. Guo began showing up at the homes of some of his biggest critics, including one who had been working with law enforcement.
The total fines ordered in the case constitute one of the SEC’s largest enforcement cases of its fiscal year, which runs through the end of September. The deal calls for the companies to post a notice of the regulatory case on their websites and to repay proceeds of their fundraising within two weeks. The SEC often sets up what it calls a “fair fund,” whose administrator distributes money back to harmed investors.
“The remedies ordered by the commission today, which include a fair fund distribution, will provide meaningful relief to investors in these illegal offerings,” said Richard Best, the director of the SEC’s New York regional office.
GTV and Saraca also resolved an investigation by the New York Attorney General’s Office into their fundraising. New York state officials said the companies failed to register as securities dealers before conducting the offerings. New York imposed a $479 million penalty that will be offset by any funds GTV and Saraca pay to the SEC.
The Wall Street Journal first reported many details of the SEC’s probe into the companies tied to Mr. Guo last year. The SEC said its investigation is ongoing, a signal that regulators could formally allege wrongdoing by individuals.
In a statement, GTV and Saraca said they were “pleased to have reached this solution, which achieves our goal of returning funds to our supporters, an objective we have had since these regulatory matters commenced.” A representative of Voice of Guo Media didn’t respond to a request for comment.
Mr. Guo said on social media that he accepted the SEC’s penalty but that the companies had been the victims of “dark forces” of China’s Communist Party. “Our cooperation with the SEC has been a success!” he wrote.
A big question is whether GTV and the other entities tied to Mr. Guo will be able to pay the $539 million settlement, said Sasha Gong, a former political prisoner in China who has known Mr. Guo for several years and has been helping advise investors in the companies about how to report their concerns to law enforcement.
She said the settlement falls short of the hopes of many investors in GTV, particularly those who say Mr. Guo subsequently incited supporters to harass his critics. “They want him to be arrested,” she said.
One such disgruntled investor is Hawaii-based Jiamei Lu, who sent $40,000 to Voice of Guo Media last year. Soon after, Ms. Lu grew suspicious of Mr. Guo and the fundraising effort, she said, and began providing information to the SEC and the Federal Bureau of Investigation.
Mr. Guo has lambasted Ms. Lu online and called her a proxy for the Communist Party, a claim she strongly denies.
She said while she has all but written off getting back the money she invested, the SEC’s settlement was far from enough.
“They hurt so many people and so many families,” she said.
GTV and Saraca raised some of their money from individual investors who didn’t meet wealth and income requirements for the deal, the SEC said in a settlement order. Under U.S. law, companies that target such smaller investors must file financial disclosures with the SEC and provide the information publicly.
Voice of Guo targeted many of the smaller investors who bought into the deal, some of whom invested $100 or less, the SEC said.
The SEC said GTV and Saraca transferred about $100 million of the capital they raised to a hedge fund, which used about $30 million to trade spot currencies and derivatives. The fund had investment losses of about $29 million as of late July, the SEC said.
The companies also raised money by selling assets called G-Coins and G-Dollars, which they marketed on YouTube, Twitter and other social-media websites. They said the digital tokens could be used to buy goods and services on the media platform they planned to build. The businesses didn’t develop or distribute the digital assets they sold, according to regulators.
Mr. Guo and Mr. Bannon found common ground in the past few years as tough critics of China, appearing frequently together in person and in online videos. Mr. Bannon also served as one of GTV’s directors, according to the company. Neither he nor any other individual is named in the SEC’s announcement.
Mr. Bannon was charged with fraud in an unrelated case last year in connection with an alleged scheme to siphon off hundreds of thousands of dollars from a crowdfunding campaign that backed building a wall along the U.S. southern border. At the time of his arrest in August 2020, he was on Mr. Guo’s yacht. Mr. Bannon, who pleaded not guilty, was later pardoned by former President Donald Trump.
A representative for Mr. Bannon didn’t respond to a request for comment.
Regulator says companies violated investor-protection laws
https://i.imgur.com/KJEY4oK.jpg
Guo Wengui, seen in 2017 in New York, is a former real-estate developer who fled China a few years ago.
Sept. 13, 2021
WASHINGTON—Three media companies tied to exiled Chinese businessman Guo Wengui have agreed to pay $539 million to settle regulatory claims they violated investor-protection laws when they raised money from over 5,000 investors.
The Securities and Exchange Commission said the agreement resolves an investigation it began last year into whether the sale of stock and digital assets complied with rules meant to protect small investors. The companies said the money they raised would be spent to build a news and social-media platform that would be “the only uncensored and independent bridge between China and the Western world,” according to the fundraising documents.
The three businesses—GTV Media Group Inc., Saraca Media Group Inc. and Voice of Guo Media Inc.—settled the SEC’s probe without admitting or denying wrongdoing. The total monetary sanctions include over $480 million that must be repaid to investors and $35 million in fines, the SEC said.
Mr. Guo, a former real-estate developer who fled China a few years ago, has portrayed himself as a wealthy dissident of the Communist Party. After taking up residence in New York, he used a partnership with former Trump political adviser Steve Bannon to build a large online following. In China, he is considered one of the country’s top fugitives and has faced longstanding allegations of money laundering, fraud and other crimes, all of which he has denied, and has applied for asylum in the U.S.
For more than a year, investors in the companies have complained that they couldn’t get their money out. The issue escalated after supporters of Mr. Guo began showing up at the homes of some of his biggest critics, including one who had been working with law enforcement.
The total fines ordered in the case constitute one of the SEC’s largest enforcement cases of its fiscal year, which runs through the end of September. The deal calls for the companies to post a notice of the regulatory case on their websites and to repay proceeds of their fundraising within two weeks. The SEC often sets up what it calls a “fair fund,” whose administrator distributes money back to harmed investors.
“The remedies ordered by the commission today, which include a fair fund distribution, will provide meaningful relief to investors in these illegal offerings,” said Richard Best, the director of the SEC’s New York regional office.
GTV and Saraca also resolved an investigation by the New York Attorney General’s Office into their fundraising. New York state officials said the companies failed to register as securities dealers before conducting the offerings. New York imposed a $479 million penalty that will be offset by any funds GTV and Saraca pay to the SEC.
The Wall Street Journal first reported many details of the SEC’s probe into the companies tied to Mr. Guo last year. The SEC said its investigation is ongoing, a signal that regulators could formally allege wrongdoing by individuals.
In a statement, GTV and Saraca said they were “pleased to have reached this solution, which achieves our goal of returning funds to our supporters, an objective we have had since these regulatory matters commenced.” A representative of Voice of Guo Media didn’t respond to a request for comment.
Mr. Guo said on social media that he accepted the SEC’s penalty but that the companies had been the victims of “dark forces” of China’s Communist Party. “Our cooperation with the SEC has been a success!” he wrote.
A big question is whether GTV and the other entities tied to Mr. Guo will be able to pay the $539 million settlement, said Sasha Gong, a former political prisoner in China who has known Mr. Guo for several years and has been helping advise investors in the companies about how to report their concerns to law enforcement.
She said the settlement falls short of the hopes of many investors in GTV, particularly those who say Mr. Guo subsequently incited supporters to harass his critics. “They want him to be arrested,” she said.
One such disgruntled investor is Hawaii-based Jiamei Lu, who sent $40,000 to Voice of Guo Media last year. Soon after, Ms. Lu grew suspicious of Mr. Guo and the fundraising effort, she said, and began providing information to the SEC and the Federal Bureau of Investigation.
Mr. Guo has lambasted Ms. Lu online and called her a proxy for the Communist Party, a claim she strongly denies.
She said while she has all but written off getting back the money she invested, the SEC’s settlement was far from enough.
“They hurt so many people and so many families,” she said.
GTV and Saraca raised some of their money from individual investors who didn’t meet wealth and income requirements for the deal, the SEC said in a settlement order. Under U.S. law, companies that target such smaller investors must file financial disclosures with the SEC and provide the information publicly.
Voice of Guo targeted many of the smaller investors who bought into the deal, some of whom invested $100 or less, the SEC said.
The SEC said GTV and Saraca transferred about $100 million of the capital they raised to a hedge fund, which used about $30 million to trade spot currencies and derivatives. The fund had investment losses of about $29 million as of late July, the SEC said.
The companies also raised money by selling assets called G-Coins and G-Dollars, which they marketed on YouTube, Twitter and other social-media websites. They said the digital tokens could be used to buy goods and services on the media platform they planned to build. The businesses didn’t develop or distribute the digital assets they sold, according to regulators.
Mr. Guo and Mr. Bannon found common ground in the past few years as tough critics of China, appearing frequently together in person and in online videos. Mr. Bannon also served as one of GTV’s directors, according to the company. Neither he nor any other individual is named in the SEC’s announcement.
Mr. Bannon was charged with fraud in an unrelated case last year in connection with an alleged scheme to siphon off hundreds of thousands of dollars from a crowdfunding campaign that backed building a wall along the U.S. southern border. At the time of his arrest in August 2020, he was on Mr. Guo’s yacht. Mr. Bannon, who pleaded not guilty, was later pardoned by former President Donald Trump.
A representative for Mr. Bannon didn’t respond to a request for comment.