The Securities and Exchange Commission charged a solar panel company headquartered in South San Francisco and three of its former executives with defrauding investors by concealing the transfer of nearly half of the ownership stake in its Chinese subsidiary to three individuals in China who manage the subsidiary.

The SEC alleges that Worldwide Energy and Manufacturing USA Inc. (WEMU) raised nearly $9 million from U.S. investors in early 2010 in order to expand its solar subsidiary based in Rugao City, China.

The Chinese subsidiary represented the bulk of WEMU’s operations and generated 77 percent of the company’s revenue the previous year.

In a power point presentation at road shows and in other communications with investors, the company’s founder and chairman of the board Jimmy Wang and the company’s president Jeffrey Watson touted the solar subsidiary’s success as the primary growth area for the company and represented that the company fully owned its Chinese subsidiary.

What they didn’t tell investors was that WEMU actually was set to transfer 49 percent of the equity in the Chinese subsidiary to its three managers.

This critical ownership deal was not disclosed in the company’s filings or offering documents.

Later, Wang and his wife Mindy Wang, who served as the company’s vice president, secretary and treasurer, went so far as to sign additional agreements to effectuate the transfer that were concealed from WEMU’s board and auditors.

WEMU, the Wangs, and Watson agreed to settle the SEC’s charges.

Without admitting or denying the SEC’s allegations, WEMU agreed to pay a $100,000 penalty and be permanently enjoined from future violations of antifraud, reporting, books and records and internal controls provisions of the federal securities laws.

The Wangs and Watson consented to permanent bars from serving as officers or directors of a public company and agreed to be permanently enjoined from future violations of the antifraud and other provisions of the federal securities laws.

Mindy Wang and Watson each agreed to pay penalties of $50,000.

The terms of the settlement with Jimmy Wang reflect credit given to him by the Commission for his substantial assistance in the investigation and the fact that he has entered into a cooperation agreement to assist in the ongoing investigation.

WEMU was represented by  Paul Wood, a partner at Moye White in Denver.

Watson was represented by Caz Hashemi, a partner at Wilson Sonsini Goodrich & Rosati in Palo Alto, California.

The Wangs were represented by Louise Ma, a partner at Kilpatrick Townsend & Stockton in San Francisco, California.

“WEMU and its executives deliberately withheld the fact that its investors would not have a full ownership stake in its largest and most profitable subsidiary,” said Marc J. Fagel, Director of the SEC’s San Francisco Regional Office. “The decreased ownership interest in the subsidiary would be a key piece of information for anyone investing in a company with significant offshore operations.”