Kandi Technologies Says SEC Won't Act On Probe

Kandi Technologies Group Inc. KNDI shares gained Tuesday after the company said the Securities and Exchange Commission won't take enforcement action in connection with a probe disclosed by Kandi last March. Separately, the SEC brought charges in May against three stock promoters for an alleged pump-and-dump scheme related to Kandi, which the group had previously taken public. The Chinese electric vehicle-maker's Chief Executive Hu Xiaoming secretly agreed in 2009 to provide stock options to the promoters in exchange for fraudulently manipulating the share price, according to the complaint against the three promoters. Xiaoming said Tuesday that he's pleased by the decision of the SEC regarding Kandi, which he said aims to protect shareholders and build the company. "We will continue to pursue those goals with transparency and in compliance with all applicable laws and regulations," Xiaoming said. In October, Sharesleuth reported what it characterized as "a mysterious network of social-media touters" who helped double Kandi's share price during a one-week period in June 2014. The anonymous stock pumpers boosted Kandi in a flood of bullish posts on StockTwits and other investment-related message boards, and then deleted the messages or shut down their accounts entirely, according to Sharesleuth, which is affiliated with short seller Mark Cuban. The coordinated posting ended abruptly in late August, just before Kandi announced it was selling $71 million in stock to undisclosed investors, at a 10 percent discount to the market price, according to Sharesleuth, which had earlier raised questions about Kandi's claimed U.S. sales figures. In May, George Tazbaz of Canada, Roger D. Lockhart of Arkansas and Shawn A. Becker of Overland Park, Kansas were named by the SEC complaint in connection with the earlier Kandi scheme. The complaint also named S. Paul Kelley of Canada and Robert S. Agriogianis of Florham Park, New Jersey in connection with related allegations concerning China Auto Logistics Inc. CALI and Guanwei Recycling Corp. GPRC. Kelley and Lockhart immediately agreed to settle the charges for $9 million, while Agriogianis signed a cooperation agreement. Tazbaz and Becker were expected to litigate the charges.