Wey started New York Global Group in lower Manhattan. The firm found a niche after Wey, born in China but now a US citizen, developed a pipeline of Chinese companies seeking access to Wall Street’s financial markets. NYGG’s primary tool to accomplish this was through reverse mergers of shell companies on the NASDAQ.
According to Wey’s complaint, filed by Lupkin PLLC, NASDAQ wanted more companies to list on its exchange after the 2008 financial meltdown. Like other firms, NASDAQ looked to China. Opening a new office in Beijing in December 2007, NASDAQ initiated a public campaign to solicit more Chines companies to consider listing on its exchange. The NYSE opened its own office there in March 2008.
Benjamin Wey
Attorney David Siegal (left) with Benjamin Wey in Lower Manhattan
Wey’s NYGG acted as a consultant that led to listings of multiple Chinese companies on NASDAQ, At first, Wey claims that NASDAQ senior executives took him golfing and participated in road shows across China. However, by 2010 the environment changed.
The Securities and Exchange Commission (SEC) started investigating a number of Chinese companies for fraudulently misrepresenting their accounting numbers. The Big 4 accounting firms, who also aggressively sought business in Asia, were drug into the investigation. In August 2010, Barron’s did an article on these frauds and named Wey as “One of the most controversial promoters of Chinese reverse takeovers.” Wey disputed this claim.
According to the compliant, NASDAQ fed into the narrative against Chinese firms and the media frenzy to wrongly target Wey for participating in a widespread fraud. The fraud claim was that Wey was giving away shares in shell companies to give the appearance that there was a large number of individual investors involved in trading. The NASDAQ rule Wey violated was 5505(a)(3) (formerly listing rule 4310(c)(6)) – the so-called “300 Round Lot Rule.” The rule requires a company to have no fewer than 300 shareholders holding a minimum of a “round lot,” which is a stock position of 100 shares or more.
Authorities took these charges seriously and in January 2012, expecting to find a printing press spewing out hundreds of stock certificates, Wey’s office and home were raided by dozens of FBI agents. No stock certificates were found in the raid but over three years later he was indicted.
The case never went to trial because last year Judge Alison Nathan (Southern District of New York) said that the search of Wey’s properties violated his 4th Amendment rights. All of the evidence, which consisted of a number of personal items, were excluded. As Wey’s attorney David Siegal, Haynes & Boone, told me shortly after the ruling, “It’s hard to prosecute a case without evidence.” Last summer, the US Attorneys office in the SDNY dropped the case as did the SEC. With the criminal charges dropped, Wey’s ankle monitoring device, which he wore for almost two years, was removed. Since then, Mr. Wey has maintained a low profile.
">Wall Street financier Benjamin Wey has filed a civil lawsuit in New York Supreme Court against NASDAQ alleging that it mislead federal authorities which led to his wrongful prosecution. He is seeking $650 million in damages.
Wey started New York Global Group in lower Manhattan. The firm found a niche after Wey, born in China but now a US citizen, developed a pipeline of Chinese companies seeking access to Wall Street’s financial markets. NYGG’s primary tool to accomplish this was through reverse mergers of shell companies on the NASDAQ.
According to Wey’s complaint, filed by Lupkin PLLC, NASDAQ wanted more companies to list on its exchange after the 2008 financial meltdown. Like other firms, NASDAQ looked to China. Opening a new office in Beijing in December 2007, NASDAQ initiated a public campaign to solicit more Chines companies to consider listing on its exchange. The NYSE opened its own office there in March 2008.
Benjamin Wey
Attorney David Siegal (left) with Benjamin Wey in Lower Manhattan
Wey’s NYGG acted as a consultant that led to listings of multiple Chinese companies on NASDAQ, At first, Wey claims that NASDAQ senior executives took him golfing and participated in road shows across China. However, by 2010 the environment changed.
The Securities and Exchange Commission (SEC) started investigating a number of Chinese companies for fraudulently misrepresenting their accounting numbers. The Big 4 accounting firms, who also aggressively sought business in Asia, were drug into the investigation. In August 2010, Barron’s did an article on these frauds and named Wey as “One of the most controversial promoters of Chinese reverse takeovers.” Wey disputed this claim.
According to the compliant, NASDAQ fed into the narrative against Chinese firms and the media frenzy to wrongly target Wey for participating in a widespread fraud. The fraud claim was that Wey was giving away shares in shell companies to give the appearance that there was a large number of individual investors involved in trading. The NASDAQ rule Wey violated was 5505(a)(3) (formerly listing rule 4310(c)(6)) – the so-called “300 Round Lot Rule.” The rule requires a company to have no fewer than 300 shareholders holding a minimum of a “round lot,” which is a stock position of 100 shares or more.
Authorities took these charges seriously and in January 2012, expecting to find a printing press spewing out hundreds of stock certificates, Wey’s office and home were raided by dozens of FBI agents. No stock certificates were found in the raid but over three years later he was indicted.
The case never went to trial because last year Judge Alison Nathan (Southern District of New York) said that the search of Wey’s properties violated his 4th Amendment rights. All of the evidence, which consisted of a number of personal items, were excluded. As Wey’s attorney David Siegal, Haynes & Boone, told me shortly after the ruling, “It’s hard to prosecute a case without evidence.” Last summer, the US Attorneys office in the SDNY dropped the case as did the SEC. With the criminal charges dropped, Wey’s ankle monitoring device, which he wore for almost two years, was removed. Since then, Mr. Wey has maintained a low profile.
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