UPDATE 2-Investor sues Xinhua Finance Media in New York

(Adds statement from Singhal spokeswoman)

By Emily Chasan

NEW YORK, May 22 (Reuters) - An investor filed a lawsuit on Tuesday accusing China-based Xinhua Finance Media Ltd. XFML.O of misrepresenting material facts about itself.

The lawsuit, brought by Israel Bollag in the Southern District of New York, also names the underwriters of the company's March initial public offering, J.P. Morgan Securities Inc. (JPM.N), UBS AG (UBSN.VX), CIBC World Markets Corp. (CM.TO) and WR Hambrecht & Co., its chief executive officer, Fredy Bush, and its former chief financial officer, Shelly Singhal.

The lawsuit seeks class action status.

Citing an article published on May 21 by business weekly Barron's, the lawsuit alleges the company's IPO prospectus, filed with U.S. regulators in February, did not disclose that an investment company Singhal owns, Bedrock Securities, had been under a cease-and-desist order, or details about a civil suit he is fighting.

"The Prospectus, at the time it became effective, was inaccurate and misleading, contained untrue statements of material fact and/or omitted to state material facts," the lawsuit said.

Two senior executives recently quit proxy advisory firm Glass Lewis & Co. amid questions over whether its parent, Xinhua Finance Media, withheld unfavorable information about Singhal from investors.

Xinhua Finance Media is controlled by Tokyo-listed Xinhua Finance Ltd. (9399.T), which produces business and financial news programs distributed across television, print media and radio in Beijing and Shanghai.

There is an apparent disagreement over whether the company had actually received a cease-and-desist order from the National Association of Securities Dealers (NASD).

A Bedrock spokeswoman said on Monday that in April 2006 the NASD sent a letter to Bedrock requesting that it stop its operations so the NASD could examine the company's operations concerning certain potential violations of NASD rules.

But NASD spokeswoman Nancy Condon said on Monday the NASD did not issue a cease-and-desist order against the company.

A spokeswoman for Xinhua Finance Media had no immediate comment on the lawsuit. A spokeswoman for Singhal said: "All the required disclosures were made in the offering. The suit will be vigorously defended."

On Monday, Xinhua Finance Ltd. spokeswoman Joy Tsang said all of the information was disclosed during the IPO due-diligence process, and that the company had been told none of the information had to be disclosed in the prospectus.

Glass Lewis, based in San Francisco and one of three major U.S. proxy advisory firms, said on Monday that Lynn Turner, its managing director of research, had resigned effective June 8. Glass Lewis's managing director and editor of financial research, Jonathan Weil, left the company on May 18.

Proxy advisory firms provide research and proxy voting recommendations for institutional investors and money managers.