Not Only Chinese Reverse Mergers Are At Risk Of Slant Frauds
The Chinese reverse mergers, which are incorporated in Nevada or Delaware, are not the only ones at risk of fraud. Chinese companies incorporated in Bermuda, Cayman Islands, Singapore or Jersey also need to be considered as having an equal risk of fraud as reverse mergers. Chinese companies incorporated offshore trade everywhere: New York, London, Hong Kong, Singapore. In New York, we have Baidu (BIDU), which was incorporated in the Cayman Islands. In Hong Kong, we can find Tencent (700), which was incorporated in the Cayman Islands as well. In Singapore, we can find Yangzijiang Shipbuilding (BS6), which was incorporated in Singapore, but, just like in the other two examples, its management team is Chinese and lives in China. They all have the same risk as Chinese reverse mergers because the companies are incorporated and listed outside of mainland China. Therefore, the Chinese have the same legal protection on both reverse mergers and offshore corporations. This setup offers a great opportunity for the cunning Chinese to dupe the gullible foreigner. Even after the foreigner raises his attention and chooses to sue the Chinese swindler, it is highly unlikely that he will be successful in the Chinese court system, which, above all, protects its own nationals from foreigners.