The value of micro cap stock for Suntech Power Holdings Co. Ltd. (NYSE:STP) was lower on Tuesday after the solar company admitted it may have failed to prove the existence of German bonds that were taken as loan collateral.
According to Bloomberg, the admission adds to the growing list of concerns about the way Chinese businesses are engaging in the solar industry, leading to a number of investigations and lawsuits. The failed verification marks the third time in one week that regulators have uncovered weak internal controls in Chinese companies.
"One of the big concerns is that we cannot impose the typical scrutiny that we would like, in terms of the audit function, for a lot of these companies," said Andrew Karolyi, a professor of finance at Cornell University who studies foreign capital flows.
A separate Bloomberg article states that now, Suntech will need government intervention if it hopes to stay afloat, as the company is about $541 million deep in debt.
As of 3:19 p.m. on Tuesday, July 31, Suntech shares were down 22 percent to $1.04.
