China’s CleanTech sues Nasdaq for alleged racism

CleanTech Innovations has filed a New York law suit against Nasdaq for alleged discriminatory acts against Chinese companies after it was forced to delist last year.

It is the Liaoning-based company’s latest move in fighting against Nasdaq’s removal decision. In December 2011, the plaintiff won a temporary restraining order against the delisting in the New York State Supreme Court, but the ruling was later overturned by the United States District Court for the Southern District of New York.

The Chinese company has recently filed an updated complaint before the United States District Court for the Southern District of New York against the Nasdaq Stock Market and the Nasdaq OMX Group for alleged racial profiling and discriminatory acts against CleanTech Innovations and China-based companies.

The plaintiff has instructed Blair Fensterstock, the managing partner of New York firm Frensterstock & Partners, and Philadelphia lawyer Arlen Specter, who is the former US Senator and former chairman of the US Senate Committee on the Judiciary, to represent it before the court. Both counsel were involved in the company’s previous legal proceedings.

“I’ve undertaken representation of CleanTech because of evidence of racist discrimination against the company because it is Chinese,” said Specter in a statement.

“Nasdaq’s delisting of CleanTech has resulted in losses of more than $200m in CleanTech’s shareholders’ value and loss of opportunities to bid on more than $100m in contracts for wind energy towers on New Jersey’s coast, which would have resulted in US jobs.

“This matter involves more than a private dispute against two litigants and impacts on US diplomatic relations with China.”

The defendants are advised by Gibson Dunn & Crutcher Washington DC-based partner Douglas Cox, who is vice-chair of the firm’s crisis management practice group.

Nasdaq approved CleanTech’s listing in December 2010 and issued a delisting notice a month later, stating that the company intentionally failed to disclose material information about bridge financing of $20m that it received in December.

The Chinese company has responded by stating that it complied with Nasdaq’s listing standards, has never been late in its regulatory filings and has complied with securities laws and disclosure requirements.

Chinese businesses listed in the US suffered significant share price reductions during 2011 following accounting fraud allegations involving a number of Chinese companies that have listed in the US through reverse mergers. About 20 Chinese companies, including CleanTech, were delisted by Nasdaq in 2011. The adverse market environment in the US has also triggered a wave of voluntary delistings of Chinese companies through management buyouts (16 January 2012).