January 10, 2017 / 9:29 PM / 7 months ago

Chicago Stock Exchange responds to fake news' over China deal

NEW YORK (Reuters) - The Chicago Stock Exchange has asked the U.S. Securities and Exchange Commission to remove a letter from its website that fraudulently claims to be from a journalistic organization calling for a halt to the exchange's sale to a China-led consortium.

The letter "is nothing more than 'fake news' masquerading as investigative journalism," Albert Kim, associate general counsel of the exchange, known as CHX, said in response to the letter on Jan. 6.

The author of the disputed letter was attempting to undermine the SEC rule filing process and the integrity of the government, Kim said.

Fake news became a prominent feature of last year's U.S. presidential election, prompting Facebook to take steps to better detect and flag misleading articles on its social media platform.

The CHX was referring to a letter attributed to John Ciccarelli on behalf of the Global Investigative Journalism Network (GIJN) and dated Jan. 2.

It claimed that the sale of CHX to an investment group led by China's Chongqing Casin Enterprise Group would give Chinese investors operating through shell companies 99 percent control of CHX and raised serious anti-money laundering concerns.

Two days later, Dave Kaplan, executive director of GIJN, wrote to the SEC saying the Ciccarelli letter was a fraud and had no connection to the organization.

"We can assure you that we did not file these comments and ask that they be withdrawn from the official record," he said.

Kevin Goldberg, a lawyer for the GIJN, confirmed Kaplan wrote the second letter.

The SEC declined to comment.

The letter is still on the SEC's website. It was not possible to determine the identity of the author.

CHX's Kim said that once the deal closes, 50.5 percent of CHX will be indirectly owned by U.S. citizens, with 49.5 percent indirectly owned by Chinese citizens.

The Committee on Foreign Investment in the United States, which scrutinizes foreign acquisitions of U.S. companies for national security concerns, approved the sale of CHX last month, but SEC approval is still needed.

Five members of the U.S. Congress asked the SEC to reject the CHX deal in a Dec. 22 letter to the SEC.

Led by Representative Robert Pittenger, a Republican on the Financial Services Committee and the Congressional-Executive Commission on China, the lawmakers argued the Chinese investors were involved in market sectors in China that indicated they had close ties to the state.

Reporting by John McCrank. Editing by Carmel Crimmins and Steve Orlofsky

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