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Paper dragons
Chinese companies promoted by Western investment banks have sometimes left American investors high and dry. The Trib reviewed more than 125 Chinese firms that trade or once traded on an American stock exchange, such as NASDAQ, NYSE and NYSE Amex. The newspaper found 105 of them have been delisted by the federal Securities and Exchange Commission, are the subject of fraud lawsuits or have other problems that could be of serious concern for investors and others doing business with them. When problems arise, however, the newspaper found they usually arent discovered until its too late to do anything because many Chinese companies create multiple shell firms, China keeps secret many audit records and direct foreign ownership of about half of Chinese companies is prohibited. The validity of some variable interest entity (VIE) contracts that Chinese companies are using to get foreign investment money has been challenged by the Peoples Republic and the legality of such contracts is still uncertain.

Definition of investment types

IPO: An initial public offering involves a company submitting a detailed stock registration statement and prospectus to the federal Securities and Exchange Commission before its stock can be listed for trade on American exchanges. RM: A reverse merger refers to a way companies avoid providing detailed information and go through the back door to be listed. These involve Chinese companies that acquire a bankrupt or troubled American company that has already been through the listing process so that they can begin trading sooner on a stock market. Name of Chinese company Longtop Financial Technologies Type of investment IPO Background/status Underwritten in the Cayman Islands by Goldman Sachs and Deutsch Bank, Oct. 2007, raises $183 million. Deloitte Touche, hired as the Chinese firms auditor, refused to turn over audit papers, 2011. Investors file lawsuits, 2011. SEC revokes registration, 2011. Underwritten in the Cayman Islands in 2007 by Morgan Stanley and USB Investment Bank, raises $469 million. Investor lawsuit settled, 2010. Established in Nevada, 2007. SEC suspends trading in April 2011, begins fraud probe. Investors file lawsuit. Established in Delaware, 2009. NASDAQ later suspends trading. Investors file lawsuit. The firms auditor, Deloitte Touche, and the chief financial officer resign. Established in Delaware, 2005. Ernst & Young later resigns as auditor. Investors sue for fraud. Delisted from NASDAQ. Established in Delaware (date uncertain) and traded on NASDAQ. Accused of fraud by Kerrisdale Capital, 2011. In a 45-page research report, Kerrisdale states: Based on evidence in this report, we believe that ChinaCast Education Corporation is falsifying its financial statements. We believe that the Companys revenue and profit are materially overstated in its SEC filings. Law firm in 2012 launches fraud investigation. Established in Delaware, 2007. Accused of fraud in 2011 by Sharesleuth.com, a website financed by Mark Cuban, stock trader, shortseller, Dallas Mavericks owner and Mt. Lebanon native. Class-action suit being investigated by law firm, 2011. Established in Delaware, 2004. Accused of fraud by Forensic Factor, a stock research website, 2011. Law firms begin fraud investigations. Established in Delaware, 2005. NYSE delists, 2011. Established in Delaware, 2004. NASDAQ delists, 2011. Established in Nevada, 2005. Muddy Waters, short-side stock investment firm, accused the firm of fraud, 2010. Company investigation disputes findings. Investors file class-action suit, 2010. Established in Nevada, 2007. SEC suspends trading 2012, citing staff investigation. Established in Nevada, 2008. SEC suspends trading, citing accounting problems, 2011. Auditor resigns amid reporting problems, 2011.

LDK Solar Co. Ltd. Rino International Corporation China MediaExpress Holdings, Inc. China Agritech, Inc. ChinaCast Education Corporation

IPO RM RM RM IPO

Kandi Technologies Corp.

RM

Telestone Technologies Corporation Orsus Xelent Technologies, Inc. New Oriental Energy & Chemical Corp. Orient Paper, Inc. Heli Electronics, Corp. China Changjiang Mining and New Energy Co., Let

RM RM RM RM RM RM

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AutoChina International Ltd.

IPO

Established in Cayman Islands, 2008. Investigation by the SEC, 2011. NASDAQ sends delisting notice, 2011. Annual Report, 2011: Disclosure of Transactions in the Companys Stock by Affiliates: At the request of PwC, the Company made available to PwC documents related to the SECs investigation that the Company disclosed in its Form 6-K furnished on June 30, 2011, including SEC deposition transcripts. After reviewing such SEC deposition transcripts, PwC indicated a concern that the Company and/or affiliates of the Company may have directly or indirectly funded transactions in the Companys securities to artificially inflate the trading volume of the Companys securities and that certain employees of the Company including senior management may have engaged in insider trading.PwC recommended that the Audit Committee launch an independent investigation into such matters and to determine if any such activity had occurred.The Audit Committee conducted an internal investigation into these allegations and concluded that there was not sufficient evidence to support such allegations, and that conducting a full independent investigation would not be beneficial because the independent investigator would not have access to any more information than what the Audit Committee currently has access to.PwC disagreed with the conclusions of the Audit Committee about the adequacy of the scope of procedures carried out in its investigation, the independence of counsel who assisted in such investigation, and considered the investigation carried out by the Audit Committee as insufficient under the circumstances.PwC also raised concerns regarding a loan fromour Chairman and CEOtoour CFOfor the purpose of purchasing Company stock and disclosures related thereto.The Audit Committee is aware of the loan, but does not believe any disclosure of the loan on the part of the Company was necessary because the Company is not a party to such transaction, and believes that the shares were purchased by such officer forhis own account and that such officer is the ultimate beneficial owner of the shares. Established in Cayman Islands, 2006, raises $140 million with help of Credit Suisse. Subject of Muddy Waters investigation. Class-action suit against company filed, 2011. Established in Nevada, 2007. Corporate auditor accused of past securities fraud, 2010. Short sellers accuse company of fraud, 2010. Law firm launches investigation, date uncertain. Established in Nevada, 2010. NASDAQ delists 2011 for alleged reporting errors. In 2012, CleanTech sues NASDAQ, saying the action against it was blatantly discriminatory and based upon a racially profiling set of procedures. Established in Florida, date uncertain. NYSE Amex delists, 2011. Created in Cayman Islands in 2007. JP Morgan and USB Investment Bank raise $300 million. Delisted by NASDAQ, 2011. Loretta Fredy Bush, founder and former CEO and two other board members indicted for fraud, 2011. Wyoming 2006. Sold IPO, 2009. Underwriters were Piper Jaffray and Roth Capital Partners. Raised $55 million. NYSE delists, 2011. SEC investigates for fraud, 2011. Created by blank check with no business plan in Delaware, 2007. Issued IPO, 2010. NASDAQ delists, 2011. Investors later sue for fraud. Established Delaware, 2010. SEC cites for alleged accounting irregularities. Delisted by NYSE Amex, 2011. Created by blank check with no business plan in Delaware, 2007. SEC issues halts trading on NYSE Amex after the companys independent auditor resigned and withdrew its audit opinions on the financial statements issued by the company, 2011. NYSE Amex delists, 2011. Shareholders file class-action suit, 2011. Established in Delaware, 2006. NASDAQ delists, 2011. Established in Delaware, 2006. SEC suspends trading, 2011. Auditor charges illegal acts in company reporting, 2011. Established in Nevada, 2007. NASDAQ suspends, delists, 2011.

Focus Media Holding Ltd. China Marine Food Group, Ltd. CleanTech Innovations Inc.

IPO RM RM

New Dragon Asia Corp. Xinhua Sports and Entertainment, Ltd.

RM IPO

Duoyuan Printing, Inc. China Electric Motor, Inc. China Century Dragon Media, Inc. China Intelligent Lighting and Electronics, Inc.

RM IPO RM RM

Fuqi International, Inc. China-Biotics China Ritar Power

RM RM RM

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Puda Coal, Inc.

RM

Established in Delaware, 2005. NYSE Amex delists, 2011. Investors allege fraud. Subject of SEC investigation, 2012. A 2011 company report states: The Audit Committee has found that Ming Zhao arranged for Shanxi Putai Resources Limited (Putai), another subsidiary of the Company and the parent company of Shanxi Coal, to transfer its 90% ownership (and thereby the Companys indirect 90% ownership) of Shanxi Coal to himself in September 2009 and that Yao Zhao, Ming Zhaos brother and the legal representative of Putai under Chinese law, authorized the transfer.The Audit Committee has also found that Liping Zhu, the Companys CEO, President and director on the Board, was aware of the 90% transfer but did not disclose it to any other director.Ming Zhao contends that this transfer was pursuant to a `Trusted Shareholding Agreement that granted him merely nominal ownership of Putais 90% equity interest in Shanxi Coal but reserved beneficial ownership for Putai, and also states that he effectuated this transfer for a legitimate business purpose to help Shanxi Coal obtain government approval to become a consolidator of coal mines. SEC alleges Zhao and Zhu defrauding investors, Feb. 23, 2012. Established in Delaware, 2005. NASDAQ delists, 2011. Investors file lawsuit. Established in Florida, 2008. SEC investigates for possible fraud, 2011. NASDAQ delists, 2011. Faces class action suits. Established in British Virgin Islands, 2008. Company decides to delist from NASDAQ in July 2011, after receiving delisting warning from the market. Established in Delaware, 2008. In a special report, company tells the SEC on March 2011 that company auditor Malone Bailey had resigned based on what it characterized illegal acts involving the Companys accounting records and bank statements and discrepancies in accounts receivable.Malone Bailey further advised the Company that, as a result of the issues identified in performing its audit of the Companys financial statements for the fiscal year ended December 31, 2010, it is unable to rely on managements representations as they relate to previously issued financial statements and it could no longer support its audit opinion dated March 24, 2010, related to its audit of the consolidated financial statements of the Company and its subsidiaries as of December 31, 2009, included in the Companys annual report on Form 10-K for the fiscal year ended December 31, 2009.The Company believes that it was taking appropriate steps to respond to Malone Baileys recommendations for further investigation prior to the dismissal and resignation of Malone Bailey, but Malone Bailey does not agree with the Companys assertion in this regard. Class action suit filed, 2011. NYSE Amex delists, 2011. Established in the Cayman Islands, 2000. Underwriters unclear. One of first Chinese companies to trigger action by SEC, which says the company has materially overstated its revenues and understated into net loss. NetEast agrees to settlement, 2006. Established in Nevada, 2004. The SEC files an emergency action against the firm, several of its former officers, its controlling shareholder, and others on Dec 4, 2006, alleging an orchestrated and elaborate stock manipulation scheme. NASDAQ delists, 2006. Established in Bermuda, date unclear. SEC tries to investigate, meets difficulty in obtaining work papers. SEC imposes sanctions for accounting irregularities, 2010. Established in Nevada, 2004. SEC institutes administrative proceedings, 2011. Registration revoked, 2011. Established in Nevada, 2006. Declares bankruptcy, 2011. Class-action fraud suit filed, 2011. NASDAQ suspends, delists, 2011. Established in Nevada, 2007. Auditor resigns, 2010. Shareholders sue, 2011. NASDAQ delists, 2011. Established in Nevada, 2006. Sued for securities fraud, 2011. NASDAQ delists, 2012. Established in Delaware, 2007. Shareholders file fraud suit, 2011. Auditor KPMG resigns, 2011. NASDAQ delists, 2011.

Subaye Inc. Jiangbo Pharmaceuticals Inc. China Cablecom Holdings Ltd. NIVS IntelliMedia Technology Group, Inc.

RM RM RM RM

NetEase.com, Inc.

IPO

China Energy Savings Technology, Inc.

RM

China Yuchai International, Ltd. China Expert Technology, Inc. ShengdaTech, Inc. Yuhe International, Inc. Wonder Auto Technology, Inc. China Integrated Energy, Inc.

RM RM RM RM RM RM

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Keyuan Petrochemicals, Inc.

RM

Duoyuan Global Water, Inc. Universal Travel Group

IPO RM

Established in Nevada, 2010. Auditor raises material questions, 2011. Class action suit filed, 2011. NASDAQ sends delisting notice, 2011. In its annual 10-K report filed October 20, 2011, the company reports: During the process of preparing the Companys Annual Report on Form 10-K for the year ending December 31, 2010,on or about March 24, 2011, KPMG, the Companys former independent auditor, raised certain issues primarilyrelating to unexplained issues regarding certain cash transactions and recorded sales and requested that the Audit Committee conduct an independent investigation. Based on the issues raised by KPMG, on March 31, 2011, our Audit Committee elected to commence an independent investigation of the issues raised and engaged the services of independent counsel, Pillsbury Winthrop Shaw Pittman LLP (Pillsbury), which in turn engaged Deloitte Financial Advisory Services LLP (Deloitte), as independent forensic accountants, and King & Wood, as Audit Committee counsel in the Peoples Republic of China (Pillsbury, Deloitte and King & Wood are collectively referred herein as Investigation Team). On September 28, 2011, the Investigation Team completed the investigation.On October 3, 2011, the Company provided the NASDAQ Hearings Panel with a copy of the final investigation report along with a comprehensive list of remedial actions the Company has taken and is committed to taking to remediate the accounting and internal control issues. On October 5, 2011, the Company was notified that the NASDAQ Hearings Panel exercised its discretionary authority pursuant to NASDAQ Listing Rule 5101 to delist the Companys securities from the NASDAQ Stock Market. As a result, the Companys shares resumed trading in the pink sheets under the ticker symbol KEYP.PK beginning October 7, 2011. Established in the British Virgin Islands in 2009 by Piper Jaffray, raises $87 million. Muddy Waters accuses company of fraud, 2011. Class-action lawsuit filed, 2011. NYSE suspends trading, 2012. Established in Nevada, 2006. Auditors resign, 2011. In a special report to the SEC, the company reports on April 14, 2011: Universal Travel Group (the Company or we) received notification that its principal independent accountants, Windes & McClaughry Accountancy Corporation (Windes) had resigned its engagement with the Company effective April 9, 2011. Windes was engaged by us on September 30, 2010. Windes resignation as the Companys principal independent accountant was accepted by the Audit Committee on April 11, 2011. The following reportable disagreements occurred within the period from Windes engagement through the date of its resignation, which if not resolved to the satisfaction of Windes, would have caused it to make a reference to the subject matter of the disagreements in connection with its report. Windes had informed the Company in its resignation letter that it was no longer able to complete the audit process. Windes stated this was due in part to Management and/or the Audit Committee being non-responsive, unwilling or reluctant to proceed in good faith and imposing scope limitations on Windes audit procedures. Windes also stated that Windes had lost confidence in the Board of Directors and the Audit Committees commitment to sound corporate governance and reliable financial reporting. Investors file classaction suit, 2011. NYSE suspends, 2011. Created in the Cayman Islands in 2007. J.P. Morgan raises $212 million. CFO resigns to pursue other interests, 2011. PR Newswire, Jan. 12, 2012: The Company anticipates the Ratio Change to bring its average ADS price above$1.00per share in compliance with the New York Stock Exchange continued listing standard relating to minimum average share price. The Company will update the investors immediately when the effective date of the Ratio Change is determined in due course. Established Delaware, 2010. On Jan. 4, 2012, China CGame, Inc. received a letter advising NASDAQ "has determined to initiate procedures to delist the Companys securities since the Company has not held its annual meeting within the time frame allowed under the Listing Rules 5620(a) and 5620(b). The Company is going to request an appeal of this determination before Eastern Time January 10, 2012 pursuant to the procedures set forth in NASDAQ Listing Rule 5800 Series. A hearing request will stay the suspension of the Companys securitiespending the Panels decision." In its last filing Jan. 6, 2012, company says it would appeal the decision. Established in Nevada, 2007. SEC begins investigation, seeks to revoke registration, 2011. Established in Nevada, 2006. SEC moves to deregister, 2011.

WSP Holdings Ltd.

IPO

China CGAME, Inc.

RM

China 9D Construction Group Score One, Inc.

RM RM

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Harbin Electric, Inc.

RM

China Media1 Corp. Lihua International, Inc.

RM IPO

A-Power Generation Systems, Ltd.

RM

Established in Nevada, 2005. Goes private, 2011. Citron Research other short sales researchers accuse company of accounting irregularities. Company denies. Among Harbins critics are some that are nonconventional, such as this posting from Sam E. Antar. After criticizing Harbin, Antar disclosed: I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped my cousin Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes in cold-blood for fun and profit, and simply because I could. If it weren't for theheroic efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today. There is a saying, "it takes one to know one. Established in Nevada, 2005. Ernst & Young says company misrepresents a 2006 audit report. SEC revokes registration, 2011. Created in Delaware, 2008. Underwritten by Rodman & Renshaw and others, the 2009 IPO raises $9.2 million. Books questioned by hedge fund and Seeking Alpha, a leading Internet investment Web site, 2011. Law firm studies suit, 2011. Established in the British Virgin Islands, 2008. Auditor resigns, 2011. Shareholders file fraud lawsuit, 2011. NASDAQ suspends, 2011. Company says it hopes to get NASDAQ listing back. On June 27, 2011, A-Power announced that its independent auditor, MSCM LLP, resigned. In a letter to the company a day earlier, MSCM stated that it had resigned because the Company had not retained a qualified independent forensic accounting firm to evaluate certain business transactions that MSCM stated was necessary for MSCM to complete its audit of the Company's financial statements for the year endedDecember 31, 2010on a timely basis. Established in Delaware, 2004. Auditor resigns, 2011. Chairman of audit committee resigns, 2011. SEC begins probe, 2011. NYSE Amex delists 2011. Established in Nevada, 2006. CFO quits, 2011. SEC investigates, 2011. Shareholders investigate class-action suit, 2011. Underwritten in the Cayman Islands, 2010. Underwriter USB raises $168 million. Investors file fraud suit, 2011. NASDAQ delists, 2012. Company stock goes from $8.50 a share in IPO to recent trade of 15 cents a share. Established in Delaware, 2005. Investors file class-action suits alleging accounting irregularities, 2010. Established in Delaware, 2004. NYSE (then AMEX) delists 2007. Created in the Cayman Islands in 2010. Underwriter Piper Jaffray raises $40 million. Books questioned on Seeking Alpha, a leading securities research site, 2010 and Citron Research, a leading short sellers site, 2010. Established in Delaware, 2003. Material auditing errors discovered and restatement issued, 2011. Stockholders file suit for alleged fraud, 2011. Established in North Carolina, 2004. Kerrisdale Capital, a stock research firm, accuses of fraud, 2010. Investors sue, 2010. NYSE suspends company trading, 2011. Established in Nevada, 2007. SEC begins probe after several fraud accusations, 2011 Shareholders file suit, 2010. Established in Delaware, 2004. Kerrisdale Capital, a stock research firm,questions accuracy of books. Company denies problems, 2011. NASDAQ delists, 2011. Established in Nevada, 2009. The companys accounting firm, accused of unlawful conduct in Utah, dissolves. Company auditor charged in Montana with writing bad checks, and was accused in 2008 by the U.S. Public Accounting Accountability Oversight Board with: (1) the pervasive failure to plan, perform, and document performance of the audit; and (2) inappropriately taking responsibility for the work of another auditor when the other auditor performed substantially all of the audit procedures that served. Established in Delaware, 2004. Company replaces auditor during investigation by U.S. Public Accounting Accountability Oversight Board, which reports in 2009 that the system of quality control by the firms auditors appears not to provide sufficient assurance that the Firm will refrain from issuing audit reports in circumstances in which doing so is inappropriate because the Firm has not planned, performed, supervised, or meaningfully reviewed the audit work.

HQ Sustainable Maritime Industries, Inc. China Sky One Medical, Inc. SinoTech Energy Ltd. China Natural Gas, Inc. Bodisen Biotech, Inc. China New Borun Corporation

RM RM IPO RM RM IPO

China Automotive Systems Inc. China Education Alliance, Inc. China Green Agriculture Inc. Advanced Battery Technology, Inc. BioPharm Asia Inc.

RM RM RM RM RM

China Clean Energy, Inc.

RM

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CDC Corporation/CDC Software

IPO

Created in the Cayman Islands in 1999. Trading under the name CHINA, it was the original Chinese internet firm traded on NASDAQ. CDC, the indirect majority shareholder, files for bankruptcy Oct. 4, 2011 in Georgia. On Feb. 1, 2012, CDC reports that CDC and Software International entered into a Share Purchase Agreement (as amended, the SPA) with Archipelago Holdings (the Buyer), an affiliate of Vista Equity Holdings, for the sale of CDCs indirect shareholdings in the Company. The purchase price under the SPA for CDCs shareholdings of the Company is $10.50 per share, in cash, or approximately $249,788,301 in cash. NASDAQ delists, 2012. Established in Delaware, 2010. Cited by GeoInvesting, a stock advisory site concentrating on Asian stocks, for inaccurate disclosures, 2011. Established in Nevada, 2006. Dismisses auditor for not finding certain errors, 2011. The company explains in a statement: Certain accounting and reporting errors were identified with respect to improper activities by certain employees of Guangzhou LifeTech Pharmaceutical Co. Ltd, a whollyowned subsidiary that the Company. Investors file class-action fraud suit, 2011. Established in Nevada, 2008. NASDAQ sends delisting notice, 2011, because of regulatory noncompliance. CFO resigns. The company reports: On September 21, 2011, the Company received a letter of resignation from Mr. Lei Li, who was the Chief Financial Officer of the Company at the time.Although the Company did not accept Mr. Lis resignation, Mr. Li did not continue to perform his duties as Chief Financial Officer for the Company. On December 15, 2011, the Board of Directors was informed that Mr. Li submitted a resignation letter on September 21, 2011, and had ceased working for the Company immediately after such submission.It was also brought to the attention of the Board of Directors on December 15, 2011,that the Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2011 filed on October 13, 2011, its Quarterly Report on 10-Q for the quarter ended September 30, 2011, filed on November 14, 2011 and its Annual Report on Form 10-K/A for the fiscal year ended June 30, 2011, filed on November 14, 2011, all of which included Mr. Lis signatures had in fact not been prepared or reviewed by Mr. Li, and Mr. Li had not personally signed such reports or consented to the use of his signature on such reports. Established in Nevada, 2005. Company informs SEC that it intends to suspend reporting to save money, 2011. Established in Delaware, 2008. NASDAQ delists, 2011. Registration is terminated, 2012. From company filing: On April 30, 2011, the Company's Board of Directors, after discussions with Child, Van Wagoner & Bradshaw, PLLC ("CVB"), the Company's independent accountants, determined that the previously issued audited financial statements for the fiscal year ended December 31, 2009 included in the Company's Annual Report on Form 10-K (the "2009 10-K") filed on April, 15, 2010, and the unaudited financial statements for the three months ended March 31, 2010, June 30, 2010 and September 30, 2010 included in its Quarterly Reports on Form 10-Q filed on May 24, 2011, August 17, 2011 and November 22, 2011 (collectively, the "2010 10-Qs") should no longer be relied upon and that disclosure should be made and action should be taken to prevent future reliance. Established in Florida, 2007. On March 18, 2011, the company announced the resignations of Chunyan Liu from his position as Chairman of its Board of Directors, Qian Qi as its Chief Executive Officer, Qinghua (Edward) Zhang as its Chief Financial Officer and Shujie Wu resigned as Director. Investors file fraud suit, 2012. Established in Nevada, 2010. CFO resigns, 2011. Company withdraws IPO offer, 2011. In March 2011, traded at $19. Recently it was trading at 25 cents. Established in Nevada, 2008. Withdraws registration statement, citing market conditions, 2012. The company announced Jan. 3, 2012 that it had suspended reporting to the SEC on Dec. 31, 2011 to to reduce substantial legal and accounting expenses The Company does not expect to make any further comments unless the Board of Directors has approved a specific course of action or otherwise deems disclosure appropriate. Established in Nevada, 2007. Company terminates SEC registration, 2010.

China Redstone Group, Inc. China Medicine Corporation

RM RM

China Infrastructure Investment Corporation

RM

China Industrial Waste Management, Inc. China New Energy Group Company

RM RM

China Organic Agriculture, Inc.

RM

China Power Technology, Inc. China TMK Battery Systems Inc.

RM RM

Energroup Holdings Corporation

RM

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Huifeng Bio-Pharaceutical, Inc.

RM

Jade Art Group, Inc.

RM

Orsus Xelent Technologies, Inc. Sancon Resources Recovery, Inc.

RM RM

Tongxin International, Ltd.

Hybrid (neither an IPO nor a RM)

Along Mobile Technologies, Inc. China Yingxia International, Inc. Beicang Iron & Steel, Inc.

RM RM RM

Established in Nevada, 2004. Auditor BTHK resigns on April 28, 2011, stating in letter to the company that in the course of conducting our audit of the Company's financial statements, we have become aware of information indicating that an inappropriate act may have occurred. We therefore concluded: the inappropriate act has a material effect on the financial statements of the issuer; senior management of the Company has not taken, and the Board of Directors of the Company has not caused senior management of the Company to take, timely and appropriate remedial actions with respect to this act; and, E92the failure to take remedial action warranted our resignation from the audit engagement. New auditor announced Aug. 9, 2011. Established in Nevada, 2007. The company hired Davis Accounting Group on July 13, 2009. Davis accused by the U.S. Public Company Accounting Oversight board of "pervasive failure to plan, perform, and document performance of the audit and inappropriately taking responsibility for the work of another auditor when the other auditor performed substantially all of the audit procedures that served as the basis for the Firm's opinion."Short seller attacks. No 2011 annual report filing. Davis is presently out of business. Established in Delaware, 2005. NYSE delists for not being in compliance with exchange rules, 2011. Once traded at $57.48; recently at 19 cents. Established in Nevada, 2006. Suspends registration with the SEC, 2011. In an Oct., 31, 2011 report, Sancon Resources said of a related company that its variable interest entity structure a structure used in nearly half of Chinese companies traded on American markets is under review. The company said: SanconSH is a domestic Chinese entity that is 100% set up and owned by Mr. Jack Chen, a domestic Chinese resident, it is 70% controlled by Sancon under `Variable Interest Equity' accounting method, also known as the VIE structure. On August 25, 2011, the Ministry of Commerce of China (MOFCOM) promulgated the Provisions of the Ministry of Commerce on the Implementation of Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors (Provisions). The Provisions came into effect on September 1, 2011. The Provisions formalize the procedures of the national security review for inbound M&A transactions by foreign investors, explicitly prohibit the use of theVIE structure to circumvent the national security review. In the past, the VIE structure has been widely adopted to avoid Chinas restrictions on foreign investment in certain industries, but has never been officially endorsed by any government authorities. Established in the British Virgin Islands, 2008. NASDAQ delists, 2010. Investors sue for fraud. In 2011 Market Wire reports: KPMG, the forensic accountants hired by the Company's Audit Committee, concluded that the documentary support for certain of its related-party transactions was contradictory, insufficient and lacking in substantive detail and accuracy, thus calling into question the validity of the transactions. Established in Nevada, 2005. Last SEC report 2008. SEC suspends trading Feb. 2, 2012. Stock then trading at less than a penny. Established in Florida, 2006. SEC suspends trading Feb. 2, 2012. Then trading at less than 1 cent. Established in Nevada, 2006. Last SEC report 2007. In February, 2012, SEC announces that in light of allegations made by the Division of Enforcement, the Commission deems it necessary and appropriate for the protection of investors that public administrative proceedings be instituted. Established in Indiana, 2000. Last SEC filing, 2008. SEC suspends trading Feb. 2, 2012. Then trading at less than 1 cent. Established in Nevada, 2007. Last SEC report 2008. SEC suspends trading Feb. 2, 2012. Then trading at 9 cents. Established in Utah, 2006. Last SEC report 2009. SEC suspends Feb. 2, 2012. Then trading at less than 1 cent. Established in Florida, 2006. Last report to the SEC 2008. SEC suspends trading Feb. 2, 2012. Then trading at less than 1 cent. Established in Delaware, 2007. Last SEC report 2008. SEC suspends trading Feb 2, 2012. Then trading at less than 5 cents. Established in Nevada, 2007. SEC suspends trading Feb. 2, 2012. Then trading at less than 10 cents. Established in Delaware, 2007. SEC suspends trading Feb. 2, 2012. Then trading at less than 7 cents. Established in Nevada, 2006. SEC suspends trading Feb. 2, 2012. Then trading at less than 3 cents. Established in Florida, 2007. SEC declares delinquent Feb. 2, 2012. Established in Nevada, 2008. Law judge revokes registration on January 24, 2012, for failure to provide SEC with required disclosures.

BluePoint Linux Software Corp. China Bottles, Inc. Long-e International Inc. American Unity Investments, Inc. China Display Technologies, Inc. China Wind Energy, Inc. Fuda Faucet Works, Inc. Greater China Media & Entertainment Corp. Environment Ecology Holding Company of China Shengtai Power International, Inc.

RM RM RM RM RM RM RM RM RM RM

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AgFeed Industries, Inc.

RM

AutoChina International

IPO

Established in Nevada, 2006. NASDAQ announces November 2011 company is out of compliance. This comes after company said it was investigating its accounting practices. In January 2012, company notifies NASDAQ of voluntary withdrawal of its listing after being warned by the market it was out of regulatory compliance. Created in the Cayman Islands in 2007 under blank check process with no filed business plan by EarlyBirdCapital, raises $36 million. On Nov. 30, 2011, the company files a Disclosure of Transactions in the Companys Stock by Affiliates. The notice states: At the request of PwC (PricewaterhouseCoopers), the Company made available to PwC documents related to the SECs investigation that the Company disclosed in its Form 6-K furnished on June 30, 2011, including SEC deposition transcripts. After reviewing such SEC deposition transcripts, PwC indicated a concern that the Company and/or affiliates of the Company may have directly or indirectly funded transactions in the Companys securities to artificially inflate the trading volume of the Companys securities and that certain employees of the Company, including senior management, may have engaged in insider trading.PwC recommended that the Audit Committee launch an independent investigation into such matters and to determine if any such activity had occurred.The Audit Committee conducted an internal investigation into these allegations and concluded that there was not sufficient evidence to support such allegations, and that conducting a full independent investigation would not be beneficial because the independent investigator would not have access to any more information than what the Audit Committee currently has access to.PwC disagreed with the conclusions of the Audit Committee about the adequacy of the scope of procedures carried out in its investigation, the independence of counsel who assisted in such investigation, and considered the investigation carried out by the Audit Committee as insufficient under the circumstances. PwC also raised concerns regarding a loan fromour Chairman and CEOtoour CFOfor the purpose of purchasing Company stock and disclosures related thereto.The Audit Committee is aware of the loan, but does not believe any disclosure of the loan on the part of the Company was necessary because the Company is not a party to such transaction, and believes that the shares were purchased by such officer forhis own account and that such officer is the ultimate beneficial owner of the shares. NASDAQ delists September 2011. Established in Nevada, 2005. NASDAQ sends delisting notice, October, 2011. Company reports in December 2011: The Company has a working capital deficiency, accumulated deficit from recurring net losses incurred for the current and prior years and significant short-term debt obligations maturing in less than one year as of September 30, 2011. These factors raise substantial doubts about the Companys ability to continue as a going concern.

China BAK Battery

RM

Page 8

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China Biologic Products, Inc.

RM

Established in Delaware, 2006. Sellers allege fraud, 2010. The company, through Sean Shao, chairman of company audit committee, announces that the company takes these allegations seriously and plans to thoroughly investigate these issues using an independent third party. In a company report on March 31, 2011, the company says: On January 26, 2010, certain allegations of fraud and criminal activity involving smuggling and related activities allegedly engaged in prior to 2005 by the CEO of the Company's primary operating subsidiary, Shandong Taibang, and by a relative of one of our directors surfaced on certain financial websites. On January 27, 2010, in response to these allegations, the Company's board of directors established a special independent subcommittee comprised of the Company's independent directors, Mr. Sean Shao and Dr. Tong Jun Lin (who were later joined by new director Dr. Xiangmin Cui), or the Special Committee, to investigate the allegations with the assistance of a reputable international firm, and report its findings to the board of directors as soon as practicable. On March 1, 2010, the Special Committee retained O'Melveny & Myers LLP, an international law firm, to advise the Special Committee and to assist in the investigation of the allegations. On November 26, 2010, the Special Committee reported its findings to the Companys board of directors, a summary of which the Company disclosed in a Current Report on Form 8-K filed with the Commission on December 3, 2010. The Special Committee could not find support for a majority of the allegations, however, the Special Committee found support that Mr. Ze Qin Lin, the husband of our former director Ms. Lin Ling Li, was imprisoned in China in connection with smuggling offenses, and with respect to the allegation that Mr. Tung Lam, the Chief Executive Officer of one of our primary operating subsidiaries, Shandong Taibang, and spouse of Mrs. Siu Ling Chan, our board chair, was previously known as Mr. Lin Ziping and was imprisoned for smuggling offenses in China, the Special Committee found evidence supporting Mr. Lam's denial of the allegation, as well as conflicting evidence with respect to this claim. As a result, the Special Committee concluded that it could neither confirm nor exclude the allegation against Mr. Lam. The findings of the Special Committee regarding Mr. Lin and its inability to reach a conclusion regarding the allegations against Mr. Lam may make investing in our Company unattractive to certain investors and may cause existing investors to end their investment in the Company, which may cause our stock price to decline.

China HGS Real Estate, Inc. NF Energy Saving Corporation Shengkai Innovations, Inc. Deer Consumer Products, Inc.

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Established in Florida, 2006. NASDAQ sends delisting notice on January 18, 2012, saying that the company fell below listing requirements. Established in Delaware, 2006. NASDAQ issues delisting notice, November 2011. Company has until May 2012 to regain compliance with listing rules. Established in Florida, 2008. NASDAQ sends delisting notice, 2011, saying stock prices were below the $1 listing requirement. Company remains listed. Established in Nevada, 2008. Comes under short-seller pressure. On Dec.16, 2011, the company announces that it has received calls from concerned shareholders regarding the sudden drop in the price of its common stock during the last 30 minutes of trading before market close on December 15, 2011. Deer believes events relate to and it is aware of the spreading of false market rumors by a distressed online blogger with a recent history of falsifying facts and records against public companies in which he and his network of relationships had short interests. Deer will not hesitate to take immediate action against individuals involved in the manipulation of Deers share price and hurting the general public in a classic `short and distort scheme. A Special Purpose Acquisition Company for explanation visit investopedia.com. Established in the British Virgin Islands, 2009. Short investor attack, 2011. Law firm announces fraud investigation, 2011. Established in the Cayman Islands in 2007 by Piper Jaffray and CIBC World Markets, raising $225 million. Stockholders file suit, settled, 2011. Established in the Cayman Islands in 2010. Underwriters are Credit Suisse and USB Investment Bank, raises $129 million. IPO price $11 per share; recent trading around $1.35 per share. Shareholders fraud lawsuits filed, 2010. Established in the Cayman Islands in 2007. Underwriter Morgan Stanley raises $188 million. IPO sells at $16 per share; recently traded for $8.56. Shareholder class-action fraud lawsuit filed, 2011. Established in Belize, 2007. SEC suspends for failure to file current required reports, 2012. Established in Delaware, 2005. SEC suspends for failure to file current reports, 2012 Established in Nevada, 2009. NASDAQ sends delist warning Jan. 31, 2012 for failure to meet minimum price requirement.
TRIBUNE-REVIEW

China Gerui Advanced Materials Group, Ltd. JA Solar Holdings Co., Ltd. Mecox Lane, Ltd.

Hybrid IPO IPO

CN insure, Inc. China Agro-Technology Holdings, Ltd. First Capital China Corporation Guanwei Recycling Corp.
Source: Tribune-Review research

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