Not So Perfect: Perfect World Slammed On Investigation News

Shares of Perfect World PWRD, China's largest online game developer, are being slammed to the tune of 24% today after report detailing that the company is being investigated by U.S. and Chinese regulators. A Chinese financial Web site is reporting Perfect World Chairman and CEO Yufeng Chi self-funded $3.14 million "in the name of others that can be manipulated to borrow the Beijing Network Technology Co., Ltd. Chi Chu," and that Yufeng's relationship with Chi Chu has not been publicly disclosed. Chi Yufeng, and "Perfect World" has never been to the U.S. SEC, the board of directors of listed companies and public disclosure of all the shareholders and the "wisdom beads network" relationship, and deliberately concealed "Chi Chu network" rights relationship, according to the Web site. The Web site alleges Yufeng used his position for personal profit to the detriment of Perfect World shareholders and that he used that position to acquire a 20% stake in Chi Chu. The Web site adds Yufeng, without the approval of Perfect World's board, made a $4.25 million investment in Chi Chu in July 2010. Perfect World's board is not independent and is controlled by Yufeng, the Web site goes on to allege. Chi Yufeng was deliberately concealing foreign stock exchange, tax evasion and large personal income tax nearly 100 million yuan or over $15.7 million based on current forex rates. Making matters more interesting is the Web site's assertion Yufeng used the help of Chinese organized crime and illegal underground banks for nefarious currency conversions. While Perfect World has not publicly disclosed the investigations, the Web asserts the following: "According to the U.S. and China's Securities Law, Company Law and other laws and regulations, a listed company's directors or general managers in the government or by government regulators and the legal institutions of any investigation, the listed company must immediately make an announcement, to protect all shareholders interests and securities markets fair and just."