Investigation Reveals SinoTechs Financial Flaws

Reno, NV Attorney serving Nevada & California

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Securities and Stock Fraud Attorney Thomas C. Bradley is currently investigating a case involving UBS, a major brokerage firm, and the sales of SinoTech Energy Limited stocks, which are traded under the symbol CTE.

In November 2010, Swiss banking affiliates UBS AG and UBS Securities LLC oversaw and confirmed SinoTech’s initial public offering; however, it was recently reported that these financial statements of SinoTech’s were fraudulent. As a result, the price of SinoTech’s shares has dropped from $8.50 to $2.35, and NASDAQ has halted all trading of them. UBS’s failure to detect SinoTech’s alleged fraud could potentially cause the firm to be liable for investors’ losses. If this occurs, it will be another case in a long string of recent ones where stockbroker negligence was deemed present based on a brokerage firm’s failure to understand the products which it is selling.

SinoTech claimed to be a leading provider of enhanced oil recovery services to major oil and gas fields in China. This faulty claim is what triggered the controversy, for on August 16, 2011, a research analyst issued a report addressing numerous problems with SinoTech’s financial statements and even the business itself. Among other things, the report states that: (1) SinoTech’s alleged sole import agent is an empty shell company with no signs of any operation or activity; (2) SinoTech’s only alleged chemical supplier also is an empty shell company, with little to no revenues; (3) SinoTech’s alleged largest subcontracting customer has unverifiable operations with minimal revenues; (4) SinoTech’s financial statements filed in the U.S. are inconsistent with its financial statements filed in China; and (5) positive statements regarding SinoTech’s internal financial controls were false and misleading.

As the underwriter for and seller of millions of dollars of SinoTech shares, we believe that UBS was obligated to perform due diligence regarding the accuracy of SinoTech’s financial statements and reported underlying business, which the firm failed to do. It appears that there were numerous aspects concerning SinoTech that UBS should have learned, which most likely would have caused it to refuse to serve as SinoTech’s underwriter and to refuse to sell SinoTech shares to investors.

If you lost money in SinoTech shares that you bought from UBS, please call Thomas C. Bradley to learn what he can do and in what ways he can assist you in regaining your financial losses.

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