OREANDA-NEWS. June 21, 2013. China Natural Gas Inc and its chairman have agreed to settle a lawsuit by the U.S. Securities and Exchange Commission accusing them of hiding loans intended to benefit the chairman's family.

A federal judge in New York signed off on a final judgment against China Natural Gas on Thursday in which the company would pay a USD815,000 civil penalty to resolve the lawsuit.

Qinan Ji, its chairman and former chief executive, separately has agreed to pay USD 100,000 and reimburse the company USD 77,479 to resolve allegations he arranged two improper loans in 2010 for USD 14.3 million and then lied about them, according to a separate judgment entered.

The SEC in a statement said Ji would also be barred from serving as an officer or director of a public company for 10 years.

"It is critical that public companies accurately report related-party transactions," said Michele Wein Layne, director of the SEC's Los Angeles regional office. "The financial penalties in this case and the officer and director bar against Ji reflects the seriousness of their misconduct."

In a regulatory filing on Wednesday, China Natural disclosed the SEC had accepted both its and Ji's settlement offers on May 30. The company and Ji are settling without admitting or denying the allegations, China Natural Gas said.

Neither a lawyer for Ji nor representatives for the SEC responded to requests for comment.

The settlement marked the latest development in a string of enforcement actions by the SEC against Chinese-based companies trading on U.S. stock exchanges stemming from accounting irregularities.

The accounting issues led to the delisting or halting of trading of many of the Chinese companies' shares. In the case of China Natural Gas, NASDAQ delisted the company in April 2012.

Filed in March 2012, the SEC's lawsuit claimed that Ji concealed a \\$9.9 million loan issued through a sham borrower to a real estate firm, Demaoxing Real Estate Co, which his son and nephew owned.

The lawsuit also said Ji hid a USD 4.4 million loan to Shaanxi Juntai Housing Purchase Co, a business partner of Demaoxing, whose then general manager was Ji's friend.

The SEC said Ji subsequently lied about who the true borrower was to China Natural Gas's board, investors and auditors and during an internal investigation.

The lawsuit also alleged that China Natural Gas did not properly report a USD 19.6 million transaction to buy a natural gas company in the fourth quarter of 2008.

The case is SEC v. China Natural Gas et al, U.S. District Court, Southern District of New York, No. 12-03824.