Focus Media (NASDAQ:FMCN) shares are soaring as the China-based operator of digital advertising signs apparently closes the book on a weird episode that resulted in a long delay in the filing of its annual report.
Back in July, the company said it would delay completion of its annual report due to a decision to have its audit committee investigate allegations from a short seller regarding certain related-party transactions in 2005. Tuesday, the company announced that it had filed the delayed Form 20-F with the SEC.
The allegations being investigated, which were disclosed in the 20-F filing Tuesday, were that Everease, a company previously run by Focus Medias founder and CEO, Jason Jiang, is a related party as a result of ongoing ties between Everease, Jiang and members of his family; and that Focus Media was making undisclosed rebate payments to a third-party ad agency through Everease in order to inflate Focus Medias reported financial performance.
Focus Media says its audit committee had completed its investigation, and that the audit committee found nothing to indicate Focus Media made undisclosed rebate payments to a third part advertising agency through Everease. The company does say, however, that it “has informed investigators” that it has concluded that Everease in fact is a related party.
The company also said Tuesday that it will announce June quarter results on Thursday.
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