Former executives of ChinaCast Education Corp. (CAST) (“ChinaCast” or the “Company”) have been sued by the U.S. Securities Exchange Commission (the “SEC”) for securities fraud and insider trading.
Chan Tze Ngon & Jiang Xiangyuan Sued by SEC
The action, which was filed in the U.S. District Court for the Southern District of New York, was brought against ChinaCast’s former Chairman and CEO Chan Tze Ngon (“Chan”) and former President Jiang Xiangyuan (“Jiang”). The SEC alleges that that both Chan and Jiang crafted a scheme that directed $41 million of the ChinaCast proceeds to certain ChinaCast subsidiaries where the former executives secretly held ownership interests. Remarkably, the complaint also alleges that Jiang used non-public information from the Company to dump over $230,000 worth of stock before the information became public. As soon as ChinaCast disclosed the fraud and insider trading, the Company’s stock price fell, thus causing serious injury to shareholders. Nasdaq also suspended trading in ChinaCast. ChinaCast’s stock has consequently been delisted from the Nasdaq exchange.
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