CORRECTED-UPDATE 1-US charges 2 execs of China-based Puda with fraud

* Chairman and former CEO are named in lawsuit

* Accused of fooling investors with an empty shell company

By Sarah N. Lynch and Aruna Viswanatha

Feb 22 (Reuters) - U.S. securities regulators charged two executives of China-based Puda Coal Inc with fraud, saying they led investors to invest in an empty shell company instead of an actual coal business.

The Securities and Exchange Commission's civil suit, filed in a Manhattan federal court on Wednesday, alleges the company's chairman, Ming Zhao, and former chief executive, Liping Zhu, tried to "steal and sell" Puda Coal's only source of revenue -- Shanxi Puda Coal Group.

The complaint alleges that Zhao transferred Puda Coal's controlling interest in Shanxi Puda to himself, and then sold a substantial portion to a fund.

It is the latest case in the SEC's continuing probe into accounting irregularities at China-based companies that list on U.S. exchanges.

Puda Coal was previously listed on NYSE Amex but was delisted last year.

A U.S. spokesman for the company did not immediately respond to a request for comment.

The company, whose shares now trade on the over-the-counter market disclosed last month that it had received a Wells notice indicating the SEC might suspend or revoke registrations for its securities because of Puda's failure to file timely, audited quarterly and annual reports.

In its lawsuit, the SEC said the two Puda executives failed to disclose the transfer of the controlling interest in Shanxi Puda in SEC filings but continued to raise funds from U.S. investors.

In September, Puda Coal said an internal probe found that Zhao transferred the stake in 2009 withour seeking formal shareholder approval, and that Zhu had been aware of the transaction.

Two months earlier, Puda's auditor, Moore Stephens, resigned, and said audit reports for the 2009 and 2010 fiscal years should not be relied on with respect to the transfer and other suspect transactions. [ID: nL3E7IC3J9]