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Showing posts with the label Autonomy

Alert: Nikola Founder Trevor Milton Indicted On Fraud Charges

The founder of embattled electric car startup Nikola Corp. has been formally indicted on fraud charges by the US Justice Department months after resigning from the company. Trevor Milton by name, he's been accused of securities and wire fraud in connection with a scheme to defraud and mislead investors. Milton is accused of misleading investors by making false statements regarding Nikola's products and capabilities. Notably, most of the investors allegedly misled were on the retail side. The DOJ alleges that Milton made false claims regarding "nearly all aspects" of Nikola's business. Milton founded Nikola in 2014 and led it through a public listing via a merger with a special-purpose acquisition company (SPAC) last year. The DOJ threw an apparent jab at SPACs in his indictment, asserting that he made 'many' of his false and misleading claims  during a period where he would not have been allowed to do so under rules that govern traditional IPOs were he

EVs: Lordstown Motors Finds Much-Needed Money

Lordstown Motors , an embattled electric car startup, seems to be finding hope in the current markets. It's secured a funding lifeline after running into major cash woes in its operations. To recall, Lordstown  warned last month that it didn't have sufficient capital to fund the commercial production of its electric truck and thus risked jeopardy of its efforts. But now, the company appears to have secured a $400mn funding commitment, regulatory filings show.  According to the filing, a New Jersey-based hedge fund named  Yorkville Advisors has committed to purchase up to $400mn of Lordstown stock over the next three years, as the publicly traded electric-car startup would get the money to fund its operations. Lordstown and Yorkville have entered into a binding equity purchase agreement for the latter to buy Class A common stock of Lordstown for at least $7.48 a share on the public markets over the next three years. Lordstown stock (NASDAQ: RIDE) currently trades for under $

EVs: Electric Supercar Maker Rimac Merges With VW's Bugatti

In the world of supercars, there's major news today. It's that one of the world's best-known legacy supercar makers is merging with a startup that makes electric supercars. The legacy automaker is the popular Bugatti brand owned by Volkswagen and the startup is Rimac based in Croatia. Rimac is combining with Bugatti to form a new company named Rimac Group . The newly formed company will have two divisions - Bugatti-Rimac , the carmaking division, and Rimac Technology , the division continuing Rimac's business of supplying automotive systems to other upscale carmakers. The new Rimac Group will be headed by Mate Rimac, the founder of Rimac Automobili for which the company is named. The headquarters of Rimac Group will eventually be in Croatia at a planned major manufacturing campus costing €200M ($237mn). Before the merger, Bugatti was wholly owned by Volkswagen, which was also a shareholder in Rimac via its subsidiary company Porsche. Now handing over its Bugatti bran

EVs: Tesla Crosses 200k+ Quarterly Delivery Milestone

Electric carmaker Tesla has crossed a major milestone in its business of car deliveries. For the first time in a three-month period, it delivered over 200,000 cars to customers, setting a record for itself. Tesla delivered 201,250 vehicles in the second quarter of 2021, compared to nearly 185,000 in the preceding quarter. In the same second quarter, the company produced 206,421 vehicles. While Tesla crossed a major delivery milestone, it slightly fell short of investor and analyst expectations with forecasts ranging from 190,000-231,000 deliveries, data polled from FactSet shows. Of the 201,250 vehicles Tesla delivered, the vast majority as usual (199,360) were Model 3 and Y vehicles while Model S and X made up a minority (1,890). The Model S and X are the higher-end Tesla models so are usually produced much less. Tesla is continuing to build up its production capacity, with new factories under construction in Texas and Germany. Currently, it has two car-churning factories in the US

SPAC: US DOJ Probing EV Startup Lordstown Motors

In the latest episode of the saga with electric vehicle startup Lordstown Motors , it's now facing an investigation from the US Justice Department for possible fraud. The pilot of this saga were  fraud accusations from short-seller Hindenburg this March and has made for an interesting series since that time. The Justice Department's investigation into Lordstown Motors was first reported by The Wall Street Journal . It's being handled by the U.S. attorney’s office in Manhattan and is in its early stages, the report said. With big ambitions, Lordstown Motors went public last year through a merger with a special-purpose acquisition company (SPAC) that added $675mn to its cash coffers to fund commercial production of its planned electric truck. But fast forward a few months after and Lordstown warned that it didn't have sufficient cash to fund production, weighing down investor hopes. The warning from Lordstown opened up a storm of backlash that despite raising hundreds o

EVs: VW To Stop Selling ICE Cars In Europe By 2035

German automaker Volkswagen has said it'll stop selling combustion engine cars in the whole of Europe by 2035 as it turns its attention towards electric vehicles. The statement came from a board member of the company speaking to the local  Muenchner Merkur newspaper. The board member in person was  Klaus Zellmer , previously the head of Porsche Cars North America. He said Volkswagen will stop selling combustion-engine vehicles in Europe between 2033 and 2035, with the US and China to come "a little later". The stated plan falls in line with European countries working hard to phase out the sale of combustion-engine vehicles to meet climate targets. Some like the UK have banned the sale of gasoline cars by 2030. This is not the first time we'll hear commitments towards electrification from Volkswagen. The German carmaker has said it plans to launch around 70 all-electric car models by 2030, backed up by tens of billions of dollars of investment. Volkswagen has its e

Markets: Panasonic Sells Off Tesla Stake Worth $3.6B

One of the major manufacturing partners of electric carmaker Tesla has sold its large stake in the company. That partner is Japan-based Panasonic , which sold its stake for about 400 billion yen ($3.6bn), the company has confirmed . Panasonic has been a strategic partner and early investor in Tesla for a long time. It bought shares worth $30mn back in 2010, the very year Tesla debuted on the public markets. That stake alone was worth $730mn at the end of March 2020. After investing $30mn in 2010, Panasonic bought more shares in Tesla over time. Now as it's sold all of them for $3.6bn, that's a very high return-on-investment, like many have made on Tesla. Panasonic says the sale of its stake won't affect its partnership with Tesla. The electronics conglomerate is a major supplier of battery cells present in Tesla's cars. Tesla itself has been seeking to diversify its supply chain to not rely majorly on a single supplier like Panasonic. At that, the company has added new

SPAC: Self-Driving Startup Embark To Go Public In $5.2B Deal

An autonomous driving startup in the US with a focus on trucks has sealed a big deal to go public via the SPAC route. You may have heard this just recently (in the case of Plus ) and wondering if we're repeating previous news, but no, it's another startup, an even bigger one by valuation. Embark Trucks, a self-driving startup founded by two University of Waterloo dropouts, has agreed to merge with a SPAC and go public with a valuation of $5.2bn. It's a pretty lavish valuation for a company still in the R&D phase and making no money. Embark will merge with Northern Genesis Acquisition Corp. II (NYSE: NGAB). The deal will hand over to the startup $414mn of cash from the SPAC and then a $200mn PIPE round, making a total of $614mn. Investors that have committed to the $200mn PIPE round include Sequoia Capital, Tiger Global, and Mubadala Capital. As part of the merger terms, Embark is getting a new board member in Elaine Chao, the former US Secretary of Transportation under

Markets: Ex-Tesla President Sells Stock Worth $270M

A former high-ranking executive of electric carmaker Tesla is reaping large monetary rewards for his time at the company. He's converted enough Tesla stock to cash that could last a generation or two. Jerome Guillen , a former president of Tesla's Heavy Trucking division, has sold shares worth $274mn over the past two weeks, SEC filings show. He left Tesla this very month after an eleven-year stint at the company. According to SEC filings, Guillen sold Tesla shares in three successive blocks worth $129mn, $90mn, and $55mn. He got those shares from options he exercised, the price he paid for those options being unknown to the public. Executives like Guillen are usually granted stock options that give them the right to purchase company shares at discounted prices and turn around to sell them at higher market prices if they wish. Guillen joined Tesla in 2010, the very year the company went public. Since then, the company's market cap has surged from $1.7bn to $600bn.  As of 20

Alert: GM Boosts EV, AV Investment To $35B

America's biggest automaker, General Motors (GM) , has once again boosted its monetary commitment towards the development of electric and autonomous vehicles. It now says it'll spend a whopping $35bn on that from 2020 through 2025, a 75% increase from its commitment prior to the pandemic. In March last year, GM first said that it'll spend $20bn on EVs and AVs from 2020 through 2025. Then, in November, it increased its commitment to $27bn. Now, it's been topped up with another $8bn, implying a major commitment on the company's part. The high spending would fund GM's ambitious plan to have made 30 new electric vehicles globally from 2020 through 2025. Like many global automakers, the company has seen the clear writing on the wall that electric cars represent the future of the auto market. Also, developing autonomous vehicles is very important strategically for an automaker looking for future prospects. In that regard, GM has its Cruise self-driving division, wh

SPAC: Lordstown CEO, CFO Resign After Cash Woes

At electric vehicle startup Lordstown Motors , two of its top executives have resigned shortly after the company warned that it didn't have sufficient cash to kick off production of its electric truck. Those two executives are CEO Steven Burns and CFO Julio Rodriguez, effective immediately. The leadership change at Lordstown follows a pattern at struggling companies. In Lordstown's case, the company says it doesn't have enough capital to fund the production of its electric truck despite raising $675mn from a SPAC merger last year. It's quite a drastic turn for Lordstown which debuted on the public markets last year with ambitious, wild promises to its investors. Even then, the company said it didn't expect to raise further capital after the $675mn from its SPAC deal but now appears to be hurting for cash. In March, Lordstown was accused of fraud by short-seller Hindenburg Research, which alleged highly faked pre-orders and undisclosed production challenges to in

SPAC: Self-Driving Startup Plus To Go Public In $3.3B Deal

An autonomous driving startup with its major operations in the US and China is the latest tech company that's set to hit the public markets through a merger with a special-purpose acquisition company (SPAC). That startup is Plus (formerly, one focused on automated trucking. Plus has agreed to a deal to merge with Hennessy Capital Investment Corp. V (NASDAQ: HCIC) and become a public company. The terms of the merger value the self-driving startup at $3.3bn. From its merger, Plus will get $345mn of cash held in trust by HCIC and then a $150mn PIPE round from investors including BlackRock and the D. E. Shaw Group. That sums up to a cool $495mn for the company to fund its operations. The cash from its SPAC merger is crucial for Plus, as a company that plans to kick off mass production of its product this year.  Plus sells a stack of hardware and complementary software to enable automated driving for trucks. Its main customer base is truck manufacturers, such as China's F

SPAC: EV Startup Lordstown Motors Is In Trouble

You may have heard of this story before - an electric car startup launches, then makes very big promises to investors as it sought to go public through a SPAC merger. But, it later turned out that those promises were a sham. In the above short story, that was Nikola , the troubled electric car startup that was the first company to test the waters of the current SPAC boom. Now, that story is likely repeating itself with another company - Lordstown Motors (NASDAQ: RIDE) . In a recent filing to the SEC , Lordstown warned that it doesn't have sufficient capital to fund commercial-scale production of its electric truck. This is despite raising $675mn from its SPAC merger last year. With its admission of lacking capital, Lordstown is definitely in financial trouble if further investment isn't secured. The question is will investors will be willing to give it loads of cash once again? Lordstown's recent admission is just much in contrast with its sentiment at the time of its SPAC

EVs: Ford Unveils New Hybrid Pickup Truck

American automaker Ford is surely committed to electric vehicles. For proof, just shortly after unveiling an all-electric version of its popular F-150 pickup truck, it's now unveiled a new hybrid truck named Maverick . The hybrid Maverick is a compact pickup powered by an electric motor in addition to a gasoline engine. Though, it isn't a plug-in hybrid so owners won't be able to charge it for extra electric-only driving range. The Maverick truck is a 2022 model with a starting price of $20k, cheap by normal truck standards. At the high-end versions, it'll sell for $30k+. Features and specs of the Ford Maverick truck include: Estimated 500 miles of range on a single tank of gas (37 miles-per-gallon) Max payload of 1,500 pounds of cargo and 2,000 pounds of tow, for the base version. Front-wheel drive engine layout, quite uncommon for a pickup Standard in-car entertainment such as Apple Carplay and Android Auto The Ford Maverick comes in three versions -  XL , XLT and

EVs: Ford Unveils All-Electric F-150 Pickup Truck

American automaker Ford has unveiled one of its most anticipated vehicles of all time, an all-electric model of its best-selling F-150 pickup truck. For months now, numerous hints had been given by Ford on the model but not a full unveiling as just done. The all-electric model named the F-150 Lightning is a major strategic play to convert the enthusiasm for Ford's top-selling ICE F-Series trucks into the electric market. It's a major attraction to existing Ford customers that'll switch to using electric vehicles while retaining one of their favorite car models. Notably, Ford's F-Series has been America's best-selling pickup truck lineup running back decades. In figures, Ford sold 787,422 F-Series trucks in 2020 alone. Shortly before Ford formally unveiled the F-150 Lightning, the truck was taken for a ride in a factory visit by US President Joe Biden, with him commenting "This sucker's quick". Specs and features The F-150 Lightning's specs and f

EVs: Mercedes-Benz Unveils New All-Electric Van

German luxury car brand Mercedes-Benz has yet again unveiled a new electric car model concept, this time an all-electric van. The new van seems to be an all-electric copy of the Mercedes  "T-Class" van which was unveiled last year. The all-electric van is named  EQT , planned to launch in 2022, according to a press statement from Mercedes-Benz. Features: The Mercedes EQT van is planned to accommodate as many as 7 passengers with its interior. By look, it has the usual luxurious features expected in a Mercedes model; plush seats with much leg space, glossy exterior et al. Other notable features of the EQT concept van include 21-inch light-alloy wheels and sliding doors on both sides of the van allowing access to the third row of seats.  Bigger Picture:  Mercedes-Benz's parent firm Daimler is focused on the electric car market for future prospects just like most major automakers out there that have seen the writing on the wall.  In that case, Mercedes has begun working on

EVs: Chinese EV Maker Nio Expands Into Norway

One of China's best-known electric carmakers is expanding into the European market in a major way, particularly in Norway. That carmaker is Nio , for which Norway will be its first step overseas. Details: Nio has officially announced its market entry  into Norway where it'll open a full retail system including showrooms and a service center. Nio's flagship ES8 SUV will be its first car to be introduced in Norway this year while its ET7 sedan follows next year. For sales, Nio says it'll open its first dedicated retail center in the country in the third quarter of this year while four more will be launched next year. Nio plans to start delivering cars to Norwegian customers in September 2021. Highlights: Norway is one of the major markets for electric cars globally, as it made up 54% of the cars sold in the country last year. It's one of the foremost countries at the push away from ICE cars towards electric models. With Norway's status as a major m

EVs: Ford, BMW Co-Invest In An EV Battery Startup

It's currently of no doubt that electric vehicles represent the future for the automobile market, and many automakers have taken heed to that. Tens of billions of dollars in spending have been earmarked for the R&D and production of electric vehicles by global automakers, with efforts spanning battery development, building new factories, charging stations et al. Now, two of the world's biggest automakers, BMW and Ford, have jointly invested in a startup working on battery technology for electric vehicles. That startup is Solid Power, a Colorado-based startup developing solid-state batteries for EVs. Details: Solid Power has raised a $130 million Series B round  co-led by Ford and BMW. The two automakers were joined by green-focused venture fund Volta Energy Technologies in the round. As part of the strategic round, Ford and BMW have expanded their joint agreements with Solid Power to develop solid-state batteries for their use. In a way, the two automakers are funding and o

Earnings: Tesla Reports Record Revenue, Profit In Q1' 21

Electric carmaker Tesla has released its earnings results for the first quarter of this year 2021, showing record sales and profits. It reported $10.4 billion in revenue, up 74% year-over-year, and a net income of $438 million which's over 26 times its net income in the same quarter last year. The revenue and profit stats disclosed by Tesla marks the highest-ever in the company's existence. It's a testament to a growing market for electric vehicles that Tesla has gotten a stronghold on. In Q1 2021, Tesla produced just over 180,000 vehicles and delivered just slightly under 185,000 vehicles to customers. Out of the number delivered to customers, Model 3 and Model Y vehicles accounted for the vast majority with 182,870 deliveries while Model S and Model X, the more premium ones, made up a much smaller 2,020 deliveries. Tesla's sales for the quarter were boosted by the market in China in which it's established a large factory capable of producing up to 450,000 cars an

Like Uber, Rival Lyft Sells Off Self-Driving Business

The main rival of ridesharing heavyweight Uber in the US, Lyft, has followed Uber's footsteps with the sell-off of its self-driving business to an outsider. It's sealed a deal to sell its self-driving business to a subsidiary of Japanese automaker Toyota. Woven Planet Holdings, a subsidiary of Toyota, will pay $550 million in cash to takeover Lyft's self-driving division. Out of that amount, $200 million will be paid upfront while the remaining $350 million gets split into payments over a five-year period. Lyft's deal with Toyota mimics that of its main rival Uber which agreed to a deal to sell off its self-driving business to a well-funded startup named Aurora. Unlike Uber, however, Lyft's sell-off is structured as one where it'll receive a cash payment for the sale and hand off the unit rather than taking an equity stake in the acquiring company as Uber did. When Uber sold its self-driving business to Aurora, it came out with a 26% ownership stake in the com

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Alert: Nikola Founder Trevor Milton Indicted On Fraud Charges

The founder of embattled electric car startup Nikola Corp. has been formally indicted on fraud charges by the US Justice Department months after resigning from the company. Trevor Milton by name, he's been accused of securities and wire fraud in connection with a scheme to defraud and mislead investors. Milton is accused of misleading investors by making false statements regarding Nikola's products and capabilities. Notably, most of the investors allegedly misled were on the retail side. The DOJ alleges that Milton made false claims regarding "nearly all aspects" of Nikola's business. Milton founded Nikola in 2014 and led it through a public listing via a merger with a special-purpose acquisition company (SPAC) last year. The DOJ threw an apparent jab at SPACs in his indictment, asserting that he made 'many' of his false and misleading claims  during a period where he would not have been allowed to do so under rules that govern traditional IPOs were he

Earnings: AMD Doubles Revenue, Triples Profit

In this earnings season, companies all over are dropping their latest quarterly results and we're here equally reporting on them. We've touched on social media companies Snap Inc and Twitter , electric carmaker Tesla , and iPhone maker Apple . Now, the next is chipmaker AMD Inc . AMD has dropped its earnings for the second quarter of 2021, showing strong prospects as revenue doubled year-over-year and net income more than tripled.   Details AMD posted $3.9bn in revenue in Q2, up 99% year-over-year and 12% from the preceding quarter. For the same period, the company's net income was $710mn , up 352% year-over-year and 28% from the preceding quarter. Doubling its revenue and nearly quadrupling net income indicates AMD has a strong yet fast-growing business. It's bound to grow even more as the company is set to complete its acquisition of rival chipmaker Xilinx . AMD makes money selling high-performance chipsets used in computers, consoles, data centers, and the likes

Antitrust: Amazon Fined $900M By EU For Privacy Violations

Tech behemoth Amazon is for the nth time in the crosshairs of the European Union (EU). The latest saga in that arena is that Amazon has been fined a record-breaking amount for alleged privacy violations, according to an SEC filing from the company. Amazon has been fined the sum of €746 million ($888mn) by the Luxembourg National Commission for Data Protection (CNPD) for not complying with data privacy laws. It's the largest fine imposed under Europe's data protection law.  The fine originates from the CNPD accusing Amazon of processing customers' personal data in violation of the EU's famous-cum-infamous General Data Protection Regulation (GDPR) laws.  In June, it was reported ( WSJ )  that the Luxembourg data protection agency had sanctioned Amazon's privacy practices and proposed a fine topping $425mn to the EU's other two-dozen or so national data protection authorities. Now, it appears that the final fine is much larger than that.  Before now, the bigges

Deal: Qualtrics Buys CX Startup Clarabridge For $1.1B

Months after getting spun out of SAP into a separate public company, Qualtrics , a major provider of online survey software, has made a major acquisition. It's agreed to buy Clarabridge , a startup that does similar work to Qualtrics in the field fondly referred to as "customer experience (CX)". Qualtrics will pay $1.1bn all with shares to buy Clarabridge. The acquisition is a major strategic play for the company, pairing Qualtrics' customer survey business with Clarabridge's similar business of measuring customer sentiment from various sources like social media posts and customer support calls. Basically, Qualtrics is in the business of weighing customer surveys directly and Clarabridge in the business of doing so indirectly . Pairing both businesses represents a major strategic play for Qualtrics. In an investor presentation, Qualtrics said that Clarabridge has $100mn in annual revenue, implying an 11x multiple that it's paying to buy the company. That&#

Deal: Amgen Buys Biotech Startup Teneobio In $2.5B Deal

It appears that this Covid era has led to a boom for companies that work on  antibodies , which are protective proteins produced by the human immune system to tackle foreign substances, usually viruses. Antibodies are very useful in the research and treatment of viruses such as Covid. There are companies that specialize in antibodies and one of them, BioLegend , was recently bought for a whopping $5.3bn . Now, another such company, Teneobio , is getting bought for a big amount. Teneobio has agreed to be acquired by Amgen , an American biotech giant. Amgen is paying $900mn upfront for the company, then an additional $1.6bn in cash contingent on the company hitting certain milestones. It sums up to a $2.5bn deal . Teneobio is a clinical-stage biotech startup working on antibodies aimed at treating cancer, autoimmunity, and other infectious diseases. As it's still in the clinical trial stage with no viable product yet, it appears that Amgen is betting big on Teneobio's trials b

Antitrust: UK Probes Facebook's $1B Kustomer Acquisition

The UK's antitrust agency has launched a probe into Facebook's latest acquisition, that of chatbot platform Kustomer Inc , which Facebook agreed to buy last November for a reported $1bn. The UK's Competition and Markets Authority (CMA) on Friday, the 30th of July, released a statement  indicating it had opened an inquiry into Facebook's purchase of Kustomer, regarding if it'll result in "a substantial lessening of competition" within the market Kustomer operates in. Such probes aren't out of the norm and are routine for big acquisitions. For Facebook, it speaks to the fact that antitrust agencies are watching the company's moves, especially regarding acquisitions. To note, two of Facebook Inc's biggest products outside the main Facebook platform, Instagram and WhatsApp , were acquisitions. In fact, it's primarily acquisitions that have propelled the company's growth. As with such probes, the UK will first seek comments from the public

Hollywood: Reese Witherspoon's Media Co. Sold In $900M Deal

A media company founded by superstar actress Reese Witherspoon has sold for a large amount to a company still in its infancy that hasn't even been named yet. That company is Hello Sunshine , a media company that produces content distributed across various platforms; movies, TV shows, podcasts, et al. Hello Sunshine has been sold to a newly-formed media venture t hat's backed by investment capital from Blackstone , the private equity giant.  The venture is led by ex Disney honchos Kevin Mayer and Tom Staggs .  As it is, the Blackstone-funded venture is acquiring a majority stake in Hello Sunshine from a group of external investors while anchor shareholders like Witherspoon and her founding partners will roll over and retain their equity stakes in the newly-formed venture. Officially, the deal's financial terms weren't disclosed, but a report from The Wall Street Journal says it's a $900mn deal. According to the report, the Blackstone-funded venture will pay $500mn

Earnings: Shopify Beats Estimates, Reaches Major Milestone

In this season of earnings results and we at The Techee  reporting on them, we're here with a beat on Shopify , which has released its earnings statement for the second quarter (April-June) of this year. In Q2, Shopify beat revenue expectations from analysts and as well achieved a major financial milestone by crossing $1bn in quarterly revenue for the first time. Shopify had $1.1bn in revenue in the quarter, up 57% year-over-year. Net income for the same period was $897mn , most of which was due to a $778mn gain in equity investments, likely from Shopify's stake in Affirm , a major 'buy now, pay later' lender. As usual, most of Shopify's sales ( $785mn ) came from "Merchant Solutions", which groups additional services the company offers atop recurring subscriptions charged to online retailers. Sales from subscriptions came at $334mn in the quarter. Gross Merchandise Volume (GMV), representing the total worth of transactions made on the Shopify platform,

Alert: Square Buys Australia's Afterpay For $29B

It's a big day in the fintech world. There's been a major acquisition with a major American fintech company, Square , buying Australia's foremost fintech startup, Afterpay , a 'buy now, pay later' lender. Square has reached an agreement to buy Afterpay for a whopping $29bn , marking one of Australia's biggest buyouts. It's a big deal that a startup founded barely seven years ago is selling for $29bn.  Square will pay the $29bn all with shares. It means that shares of Afterpay, which are traded on the Australian Securities Exchange, will be exchanged for Square stock traded on the New York Stock Exchange (NYSE). Afterpay is Australia's foremost 'buy now, pay later (BNPL)' lender in online retail. For the uninitiated, the 'buy now, pay later' business is a relatively young one providing alternatives to credit cards for consumers to shop online. It provides loans for consumers to shop online and then pay back in installments. Usually, credi

Markets: US SEC Takes Aim At Chinese IPOs

The US Securities and Exchange Commission (SEC) has taken a swipe at Chinese initial public offerings (IPOs) after regulatory hiccups in China have affected many Chinese stocks listed on US markets and American stockholders holding them. The SEC has issued new guidance on Chinese companies seeking to list shares in the US, requiring them to make certain disclosures to investors or otherwise refrain from listing in the US markets. First of all, usually, Chinese companies listing in the US don't actually sell shares of the operating companies but that of shell companies with contractual relationships with the operating companies. These shell shares, known as American Depositary Receipts (ADRs) , are used to circumvent restrictions on foreign ownership of Chinese shares imposed by the country's government. Now, the SEC in a statement has made it clear that Chinese companies seeking to list in the US must provide clear descriptions of the shell operations involved in such listing