Diligence due

24 May 2007 By Robert Cyran Follow @rob_cyran

UBS and JPMorgan floated the Chinese media firm two months ago. Its stock has plummeted 50% since. Investors relied on the firms to vet Xinhua s prospects and governance. Yet several unflattering facts about its CFO weren t disclosed.

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The chief financial officer of Xinhua Finance Media and Xinhua Finance Limited (XFL), Shelly Singhal, has resigned. Singhal currently is the subject of a $1.6m lawsuit in California for alleged embezzlement and racketeering. A brokerage which he controlled, Bedrock Securities, was issued a cease and desist order in 2006. The order has been lifted.

XFL owns 37% of Xinhua Finance Media, which is listed on Nasdaq. The new CFO at Xinhua Finance Media is Andrew Chang. The new CFO at XFL is David Wang, an exemployee of Bedrock.

Last week, two senior executives at Xinhuaowned proxy advisory firm Glass, Lewis resigned. Lynn Turner was head of research for the firm and is a former SEC chief accountant. Jonathan Weil was managing director and research editor. Weil stated, I am uncomfortable with and deeply disturbed by the conduct, background and activities of our parent company Xinhua Finance, its senior management and its directors, according to a report in Barron's.

The Chinese media group's shares have lost 50% of their value since it was floated on March 9. JP Morgan and UBS underwrote the deal.

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