(Originally published on January 27, 2012, to CBK email newsletter list.)
Unless you are suffering a hangover from Chinese New Year’s celebrations or otherwise living under a rock, you have probably already read that on Wednesday, January 25, the FBI raided the New York office The New York Global Group, run by the somewhat infamous Benjamin Wey.
There was no official announcement by the FBI about the raid, but Supervisory Special Agent, Tim Flannelly, confirmed for CBK that it did happen. When asked for the legal name of Benjamin Wey (i.e. what is on his passport), he said he could not provide that because it could “compromise the ongoing investigation.” He did confirm the spelling of “Wey”, which has sometimes been reported as “Wei” in the press. News reports have mentioned Wey’s residence was also raided, but Flannelly did not confirm that. In addition, Flannelly would not comment on Wey’s work status or if he is a citizen of the PRC or U.S.
Most who read this newsletter will make the connection that The New York Global Group is the firm which brought CleanTech Innovations Inc. (OTC QB: CTEK) to the market. As reported by CBK last week CleanTech filed a lawsuit against Nasdaq alleging that the exchange used racial profiling when making the decision to delist it last year. [CBK had been making calls to follow-up on that story prior to the news of the NYGG raid. Stay tuned.]
Most CBK readers will also not be surprised that Benjamin Wey would find himself in hot water as he and his firm has been mired down in bad press for several years and often cited as an example of a firm bringing bad apples to the market when critics question the legitimacy of RTO China stocks. CBK has stayed away from that debate as we have no first-hand experience with Wey or NYGG, nor the resources to do a respectable job investigating the allegations.
In this era, it is not enough to just mention a firm has had a few companies delisted. That is very common now and if all the i-banks, accounting firms, law firms and IR firms were given a “Scarlett Letter” for each of their clients to be delisted, it would be a very long and comprehensive list with more firms active in the sector on it than not.
As CBK has written in the past, we are looking forward to a day when the “lemons” of the sector are flushed out so those companies in good standing can get back to work trying to build their companies and provide investor value. It’s a sad day that it might be at the cost of U.S. the tax-payers’ dollar paying for the FBI’s time, instead of the sector setting its own high standards and the companies policing themselves through a legitimate sector association. But then again, the FBI’s intervention (no matter what happens in with NYGG) might be just the muscle needed to send a message to the bucket full of Chinese companies still considering trying to cheat the U.S. markets to pack up and go home.
Ultimately, to think of the U.S. capital markets without Chinese companies at this juncture of the global economy seems not only ludicrous, but a really, really bad idea. Similarly, to think that somehow there is more malfeasance with Chinese companies than with other foreign entities, such as companies based in Russia or Brazil seems equally naive.
CBK will continue to follow the story.
—Janet Stites, Publisher & Editor
