Big Award in Chinese Reverse Merger Case

In what appears to be the first actual judgment in the several dozen cases involving allegations of impropriety in cases of Chinese companies that went public in the US, a $77 million arbitration award was granted to a plaintiff in an arbitration case in Hong Kong.

AIG CEO Hank Greenberg's C.V. Starr & Co. sued the founding shareholders of China MediaExpress, which had gone public through a reverse merger in the US. There is also apparently a companion case that Greenberg brought in the US as well, this one against the company itself. So it is the founders that have to pay the arbitration judgment, not the company. Greenberg has also sued Deloitte's Chinese affiliate which was the auditor of CME.

The arbitrators in Hong Kong determined that CME was a "fraudulent enterprise."

For additional insights on reverse mergers, SPACs, other alternatives to traditional initial public offerings, the small and microcap markets and the economy, visit the Reverse Merger and SPAC Blog  by David N. Feldman, Esq., Partner of Richardson & Patel LLP.

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