WASHINGTON (Legal Newsline) - A San Francisco solar panel manufacturer and three of its former executives on Thursday settled charges brought by the Securities and Exchange Commission that they were defrauding investors.
They were accused of concealing the transfer of nearly half of the ownership stake in its Chinese subsidiary to three individuals in China who manage the subsidiary.
The SEC alleges that Worldwide Energy and Manufacturing USA raised nearly $9 million from U.S. investors in early 2010 to expand its solar subsidiary based in Rugao City, China. The Chinese subsidiary represented the bulk of WEMU's operations and generated 77 percent of the company's revenue the previous year, the SEC says.
The company's founder and chairman of the board Jimmy Wang and the company's president Jeffrey Watson said the solar subsidiary's success was the primary growth area for the company and it represented that the company fully owned its Chinese subsidiary, the SEC said.
According to the SEC, 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. Allegedly, this critical ownership deal was not disclosed in the company's filings or offering documents the SEC said.
The SEC's complaint was filed in federal court in San Francisco. WEMU, the Wangs, and Watson agreed to settle the SEC's charges. The defendants neither admitted nor denied the SEC's allegations.
WEMU agreed to pay a $100,000 penalty. The Wangs and Watson consented to permanent bars from serving as officers or directors of a public company. Mindy Wang and Watson each agreed to pay penalties of $50,000.