U.S. tilapia company accused of fraud
HQ Sustainable Maritime Industries, Seattle’s entry in the parade of U.S.-listed Chinese companies accused of accounting fraud, has reached a proposed settlement with shareholders.
But don’t expect any big celebrations. The abused investors stand to collect about USD 0.32 per share for their stock, which traded close to USD 10 in mid-2009.
The company claimed to be doing a thriving business selling pond-raised tilapia from China. But in spring 2011 HQ’s most prominent director and auditing firm both resigned, citing questions about the company’s finances and lack of management cooperation in getting answers.
The stock became all but worthless, and the Securities and Exchange Commission revoked its registration earlier this year.
Court papers filed this month in the class-action lawsuit say the defendants (or more likely, their insurers) will provide a settlement fund of USD 2.75 million in cash. That’s about USD 0.45 per share, although the attorneys’ proposed fees of 25 percent and their expenses of about USD 100,000 will trim that recovery by about 13 cents per share, according to the filings.
The targets of the suit — HQ itself, top executives Norbert Sporns, Jean-Pierre Dallaire and Lillian Wang Li, and investment bankers Roth Capital Partners and Ladenburg Thalmann, which handled HQ’s stock offerings — admitted no wrongdoing in the settlement, as is usual in such cases.