SEC Judgment Entered Against James Crane CFO of Subaye
On October 20, 2014, the Securities and Exchange Commission (the “SEC”) announced a final judgment, in an enforcement action filed by the SEC in May 2013, against James Crane, the former Chief Financial Officer of Subaye, Inc., a company based in China. Among other things, the judgment orders James Crane to pay $150,000. Crane is also barred from serving as an officer or director of a public company for ten years. According to the SEC Charges, Subaye began promoting itself during 2010 as a provider of cloud computing services to Chinese businesses. According to the SEC complaint, Subaye claimed to have over 1,400 sales and marketing employees in 2010, with reported revenues of $39 million in 2010 and projected revenues of more than $71 million for 2011.
According to the SEC charges, Subaye was had no verifiable revenues, and few, if any, real customers. The SEC complaint alleges that Subaye’s business was imaginary and non-existent.
The SEC complaint also claims that Crane signed Subaye’s materially misleading filings with the SEC containing false statements about Subaye’s revenues, business, number of employees, and customers. According to the SEC complaint, James Crane falsified Subaye’s books, records, and accounts and provided false information to its outside auditors. The SEC’s complaint also charged Crane with violating a bar from the Public Company Accounting Oversight Board (PCAOB).
According to the complaint, in January 2011, Crane and his Cambridge, Massachusetts-based accounting firm were sanctioned by the PCAOB, which permanently revoked his firm’s registration and barred him from being associated with a registered accounting firm or being associated with any public company in an accounting or financial management capacity. The SEC complaint alleges that Crane remained as the CFO of Subaye even after the PCAOB denied his request to remain as Subaye’s CFO for those two months.
James Crane consented to the injunction and penalty components of the final judgment. The court determined the length of the officer and director bar after considering the filings in the case. The final judgment permanently enjoins Crane from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and Section 105(c)(7)(B) of the Sarbanes-Oxley Act of 2002, and from aiding and abetting any violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules12b-20, 13a-1, 13a-11, thereunder, and orders Crane to pay a civil penalty of $150,000. The final judgment also prohibits Crane from serving as an officer or director of a public company for a period of ten years.
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