US Officials: China Refuses to Help Stop Investment Scams

PHOTO: Chinese Vice Premier Wang Qishan (R) meets with Mary Schapiro, chair of the U.S. Securities and Exchange Commission (SEC), in Beijing, capital of China, July 2, 2012.
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The Chinese government snubbed a U.S. request for help in cracking down on a string of alleged investment frauds that have cost Americans billions, outgoing Securities and Exchange Commission Chairman Mary Schapiro told ABC News.

The lack of cooperation has stymied efforts to recoup investor losses, she said, in one of the largest sprees of alleged financial crimes in recent memory -- one that has gone largely unnoticed by most Americans.

"The consequence is it's very much more difficult for us to prove our cases," Schapiro said in one of her final interviews before leaving the post, which will be broadcast tonight as part of an ABC News investigation airing on "World News with Diane Sawyer" and "Nightline."

WATCH the 'Nightline' report on alleged Chinese investment scams.

More than 100 China-based companies have now been de-listed, have left the NASDAQ and New York stock exchanges, have been denied listing, or have withdrawn applications, all following allegations of fraud or accounting irregularities, the ABC News investigation found.

Not every Chinese company was implicated -- many continue to thrive. But experts estimate that Americans -- everyone from small investors to hedge-fund titans -- have lost tens of billions of dollars in the suspect Chinese investments. Prosecutors in the Bernie Madoff case calculated that his investors lost about $20 billion in his decades-long Ponzi scheme.

Schapiro said the SEC opened 40 cases against Chinese firms during her tenure, financial schemes she described as "brazen" and "extraordinary." Schapiro, who stepped down in December, said that when she asked Chinese Vice Premier Wang Qishan for help during a trip to Beijing in July her requests were rebuffed.

"We haven't yet achieved a level of cooperation that makes it possible for us to get access to Chinese companies the way we need," Shapiro said. "We will fight hard to try to secure recovery for U.S. investors. But it's harder when we don't have the cooperation of the foreign government."

The wave of cases is unique because the China-based companies were listed on U.S. stock exchanges, where investors were expecting corporate financial information to be transparent, accurate and verified. In case after case, Schapiro said, questions emerged about the numbers coming from China.

NASDAQ CEO Robert Greifeld wrote a letter to ABC News in response to questions about the issue, saying the exchange has taken a series of "decisive" steps aimed at protecting investors and removing "bad actors" from the listings.

"We have taken prompt, appropriate action to protect investors and the market," Greifeld said.

READ: Letter From NASDAQ CEO Robert Greifeld to ABC News (PDF)

Later, when ABC News approached NASDAQ officials to address questions on camera about how so many allegedly fraudulent companies came to be listed in the first place, reporters were escorted off of NASDAQ property.

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