September 30, 2015

Focus Media Holding Limited and its CEO Jason Jiang will pay $55.6 million to settle charges of inaccurate disclosures about the company’s partial sale of subsidiary Allyes Online Media Holdings Ltd. to insiders, including Jiang.  In March 2010, Focus Media sold a 38 percent stake in Allyes to company insiders such as Jiang.  The sales price to these insiders represented an implied value of $35 million for the entire subsidiary and was claimed to be based on an independent third-party valuation.  However, unknown to shareholders, before the sale was finalized, a private equity firm had begun discussions with Allyes about acquiring the company for $150 million to $200 million.  The SEC alleges that Allyes asked the potential acquirer to “hold off the deal” until the insiders’ purchase was finalized.  Three months after the insider sale, Focus Media announced that Allyes had been sold to the private equity firm for an amount that valued it at $200 million.  SEC

Tagged in: Misrepresentations, Securities Fraud,