The Capital Press, a west coast regional agricultural newspaper recently reported that there is a trend for Chinese companies to acquire dormant American companies, use them as shell companies via reverse mergers and access the US stock market and investor money through the back door and under the radar.
They ran a couple of articles and an editorial in the last few weeks.
One of the examples they used is a little stale, Lazarus Industries had been a dormant medical device company acquired in 2003 and turned into American Dairy Inc., based in Utah and with no commercial presence in the US but has over $499M in shareholder money derived from it's presence on the NYSE. The paper did imply a growing incidence and cited two newer occurrences, both with ‘pump and dump’ allegations by the shareholders as recently as 2008. The SEC is apparently and unsurprisingly having some difficulty in getting documentation from at least some of these companies. The author of the original article, Mateusz Perkowski, has an email through the paper, but I haven't contacted him to ask about others.
The initial article was published right after the SCOTUS decision and when I saw it it stopped me cold. The reason the Press picked it up was that many of the acquisitions are agricultural in nature. It seems from the articles that it's mostly about raising money, but given the problems with Chinese agriculture, melamine contamination and pollution plus that already difficult issue of tracking the origins of ingredients in our food supply, I think it could have a lot more implications. There have got to be any number of concerns besides the above and the possibility of funneling Chinese cash into our elections and taking investor cash out of our economy to China without the investor’s knowledge of where it’s going. Backdoor access to the NYSE and the unwitting redirection of American capital is bad enough, but given the Citizen’s United decision it seems like something we might want to start paying a lot more attention to.