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US government launches A-Power investigation

UNITED STATES: China-based A-Power Energy Generation Systems is being formally investigated in the US by the Securities and Exchange Commission (SEC).

The troubled firm confirmed it had received a subpoena from the SEC on 17 August. The commission regulates publicly traded companies.

A-Power could not immediately be reached in Beijing for comment.

The probe follows the halting on 27 June of financial trading in A-Power’s stock on the Nasdaq stock exchange in New York. Nasdaq officials said the decision was made because the stock exchange was requesting "additional information" from A-Power.

As of late June, the company’s shares had dropped by some 70% in the previous six months.

Around the same time, A-Power’s independent auditors MSCM LLP resigned the business. MSCM said that A-Power had not retained an independent forensic accounting firm, as required by the auditors.

The setbacks came just a few weeks after A-Power announced that Shenyang Power Group Company, of which it owns 19.5%, had subcontracted some of the controversial planned 615MW Spinning Star wind farm in Texas to China Machinery Engineering Corp.

A-Power said that both firms were also to partner in raising $260 million in debt financing in China for Spinning Star.

More details of the partnership, which were to have been hammered out in May 2011, were not released.

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