Chinese IPOs have long proven popular in New York, where investors desperate to diversify their holdings out of the moribund US economy queue up to grab a slice of the mainland's rapid economic growth.
But some mainland firms listed in the US are being sent to the sin bin. The problem could be Chinese companies' general reticence to explain themselves, which mixes about as well with New York investors' high standards of corporate disclosure as a combination of chow mein and apple pie.
Or it could be far worse, with questionable mainland firms targeting America because they would not pass muster in Hong Kong.
American shareholders of Fujian-based advertising firm China MediaExpress Holdings are nervously awaiting news from the company after it halted trading in its shares late last Friday following a flurry of attacks from hedge fund short sellers and class action lawyers questioning the accuracy of its published accounts.
China MediaExpress is listed on America's Nasdaq exchange and says it is the largest company displaying video adverts on DVDs inside mainland intercity and city to airport buses, for clients including Coca Cola.
On March 2 Muddy Waters, a small Hong Kong-based research house and investment fund with a good track record of making accurate calls about New York-listed Chinese companies, posted a paper online saying it had 'amassed irrefutable evidence that CCME [China Media's Nasdaq ticker] is a substantial fraud'.
The researcher and short seller claimed China MediaExpress only operated half the in-bus DVD machines it claimed to, alleging it had evidence from interviews with its staff and customers.
