Updates to clarify role of Asensio.com.
) -- Putting together the reverse mergers that bring Chinese companies to U.S. stock exchanges requires a lot of specialized expertise and connections, so the deals tend to get done in a small world where many of the same players work together on deal after deal.
It's such a small world that relationships and connections can generate conspiracy theories even where hard evidence is lacking.
Guang Xun Xu sees himself as the victim of just such a theory.
Until May 2009, he was the Nasdaq's lead representative in China. Last December, he was the target of criticism from Manuel Asensio, managing partner of Mill Rock Investment. Separately, Asensio uses a Web site, www.asensio.com, established in 1996 to publish short-focused research. Asensio suggested that, while working for Nasdaq in China, Xu had had a "connection to questionable stock-promoter Benjamin Wey."
Wey is an investment banker who has guided a series of reverse takeover deals as head of New York Global Group. He vehemently denies that there is anything "questionable" about any of his deals. He is often criticized in connection with work he did for
, a China-based reverse merger that was delisted by the Amex four years ago, partly on the basis of accounting and disclosure problems, including issues relating to Wey's role as a promoter of the stock. Wey says his role was proper, and was adequately disclosed.
Reverse mergers are perfectly legal, but serve as a back door to U.S. exchanges that allows stock promoters to get Chinese companies listed on U.S. exchanges without a full regulatory review. Sources who work with reverse mergers have told
that the category is now the target of an
into allegations of fraud.
Xu, outraged at Asensio's innuendo, says any "connection" between himself and Wey was necessary and proper.