U.S. regulators have subpoenaed Chinese buyout target and vaccine maker Sinovac Biotech Ltd. (NASDAQ: SVA) for documents related to an alleged bribery scandal in China that may jeopardize the two buyout offers for the NASDAQ-listed company.
Sinovac failed to file its annual year-end report for 2016 with the U.S. Securities and Exchange Commission (SEC) due to an SEC enforcement inquiry and subpoena requesting documents related to the company’s investigation of the charges.
According to a Sinovac press release published on Tuesday:
“After the Company publicly announced the internal investigation arising from the Geoinvesting article, the SEC staff notified the Company of an enforcement inquiry related to the matters discussed in the article. The SEC staff subsequently issued a subpoena requesting documents related to the internal investigation. The Company, at the direction of the Audit Committee and with the assistance of independent counsel, is cooperating with the SEC in response to the staff’s requests for information.”
The details of the alleged bribery case appeared in Chinese court documents obtained by Heng Ren Partners LLC and GeoInvesting with FG Alpha Management. The details are outlined in an extensive report published in December by GeoInvesting. The details are outlined in an extensive report published in December by GeoInvesting (see link http://bit.ly/2ifnrTk).
In December Heng Ren called for immediate disclosure by Sinovac to U.S. investors and the SEC about its alleged involvement in the case. Heng Ren also called for a review and investigation by the SEC regarding this lack of disclosure, and a review of the case by the SEC and the U.S. Department of Justice (DoJ), for possible violations of the Foreign Corrupt Practices Act (FCPA), regulations that apply to SEC-registered foreign companies like Sinovac.
Boston-based Heng Ren specializes in investing in U.S.-listed Chinese companies (www.hengreninvestment.com). GeoInvesting, based in Skippack, Pennsylvania, is a well-known research firm for U.S. micro caps, and U.S.- and Hong Kong-listed Chinese companies (www.geoinvesting.com).
Before unearthing the alleged bribery scandal, Heng Ren had challenged Sinovac\’s lowball offer made by its Chairman Weidong Yin and Chinese private equity firm SAIF Partners IV L.P. as being destructive for shareholders, citing a lack of business ethics in Sinovac\’s leadership. A competing offer followed from a group consisting of PKU V-Ming (Shanghai) Investment Holdings Co., Ltd., Shandong Sinobioway Biomedicine Co., Ltd., CICC Qianhai Development (Shenzhen) Fund Management Co., Ltd., Beijing Sinobioway Group Co., Ltd., Heng Feng Investments (International) Limited and Fuerde Global Investment Limited.