Chinese Company Accuses Nasdaq of Racism

Chinese Company Accuses Nasdaq of Racism

Greetings from somewhere above the Midwest on my way to speak at the OneMedPlace conference in San Francisco this week, with the latest RM news.

Barron's reports that a lawsuit was filed this past Thursday against Nasdaq by CleanTech Innovations (CTEK) which was delisted from Nasdaq over a year ago. The suit claims, essentially, that Nasdaq systematically sought to eliminate Chinese companies from the exchange for no other reason than where they came from. Apparently this case is being taken seriously, since the presiding judge in the case was quoted as saying, "Plaintiff raises serious allegations of discriminatory behavior by NASDAQ."

The complaint alleges, according to Barron's, "NASDAQ, in creating and carrying out a discriminatory policy directed exclusively at CleanTech as a China-based company, engaged in selective prosecution in clear violation of the United States Constitution and CleanTech's equal protection rights. CleanTech now seeks a permanent injunction to prevent NASDAQ from engaging in racially discriminatory animus and damages against the defendants for acting outside of their protected sphere of immunity."

The complaint further alleges that a senior Nasdaq official stated that, "[o]ver the past year, we've developed expansive procedures to use in reviewing just this type of company that go well beyond what we do with other applications." A Nasdaq spokesman told Barron's that the allegations are without merit.

Well, wow is all I can say for the moment. It will be fascinating to see how far this case is able to be taken. There is no question that the regulators and US exchanges have been put in a difficult position following the allegation of fraud in several dozen Chinese companies that went public in the US. Is it racist? I guess the courts are now being asked to weigh in. We'll keep an eye on this one.

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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