China Oil Concern, CFO Misstated Storage Capacity

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By Phyllis Diamond

June 27 — China-based Longwei Petroleum Investment Holding Ltd. and its chief financial officer Michael Toups made fraudulent misrepresentations about the concern's storage capacity, the Securities and Exchange Commission alleged ( SEC v. Toups, M.D. Fla., No. 16-1798, 6/27/16 ).

Toups and Longwei also allegedly misled Longwei warrant holders into exercising their warrants in a bid to inject needed funds into the company, the SEC said. In addition, Toups and Longwei allegedly omitted key facts about the company's response to a third-party research firm's claims that Longwei “was a `massive fraud' with little to no observable business activity at its storage depots.”

The agency is asking the court to order permanent injunctions, civil money penalties, disgorgement plus prejudgment interest, and an officer/ director bar against Toups. The commission also launched an administrative proceeding against Longwei to decide whether to suspend or revoke the registration of its securities ( In re Longwei Petroleum Inv. Holding Ltd., SEC, Admin. Proc. File No. 3-17316, 6/27/16 ).

The complaint was filed June 27 in the U.S. District Court for the Middle District of Florida. Counsel to the defendants couldn't be identified immediately for comment.

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