The FBI today raided the offices of New York Global Group, a company specializing in taking Chinese companies public in the U.S. using reverse mergers, Bloomberg’s Patricia Hurtado and Dune Lawrence report. In a reverse merger, a private company purchases control of a public shell company and merges it with the private company. They are used by groups looking to bypass the complex IPO process.
Last year saw a wave of stock fraud accusations associated with reverse mergers. NY Global’s CEO, Benjamin Wey, has already been banned from securities trading in Oklahoma, despite having been widely quoted in the business press.
Bloomberg said Wey could not be reached for comment. He has not been formally charged.