China Stock on Watch; A-Power Energy under Fire

June 22nd, 2011 | by Jaxon Hewlett |

A-Power Energy Generation Systems Ltd. (NASDAQ: APWR), a China-based provider of onsite distributed power generation systems and micro power grids for industrial companies, earlier this week released a statement saying that the company is aware of the article published on the Seeking Alpha Web site on June 17 and is reviewing the issues raised in the article. Shares of A-Power surged nearly 2% in todays early trading. The article was written by Eiad Asbahi, a self-admitted short seller who the company says stands to benefit from a decline in A-Power’s stock price. A-Power said that it will provide answers to the issues raised in the article as soon as possible through a press release.

The Seeking Alpha report was published after the company reported last Friday that Robert B. Leckie resigned from the companys board after concerns that his views on process and best practices were not necessarily shared throughout the company. However, the company said that Leckie confirmed his resignation was not prompted by any disagreement over any matter relating to operations, policies or practices at A-Power.

Following the resignation from Leckie, Seeking Alpha raised a number of issues relating to A-Power, including allegations that the financial statements filed by the company’s main subsidiaries in China was not consistent with the financial statements filed in the U.S.

The allegations from Seeking Alpha prompted the Rosen Law Firm to announce that it is investigating potential securities claims against the company.

A-Power is not the first Chinese company this year to come under the scanner. Earlier this year, investment firms such as Muddy Waters and Citron Research raised doubts on disclosures made by companies such as China MediaExpress Holdings (Pink: CCME), Sino-Forest (Pink: SNOFF) and Harbin Electric (Nasdaq: HRBN) among others.

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