"For a significant portion of the funds transferred in an out of the company, Chong and Fuqi have been unable to provide reliable third-party verification for the information found in Fuqi’s internal records or representations made by Chong,” Ansu Banerjee, an SEC lawyer, said in the complaint.
To me it sounds like the settlement concluded with the SEC still not trusting Fuqi. A fine and de-registering to protect people that may have put more money in the company.
We still own the shares so the only option I see is the privatization. I cannot see how SEC would allow Fuqi to re-list once the financial statements are released.
If the SEC complaint is taken with full faith then it is clear that
(1) Chong's actions constitute serious breach of his fiduciary duty. I just don't know what the man was thinking?! How can verbal authorizations be sufficient to transfer almost 80% of the company's cash reserve? How can you not have internal controls to ensure that such drastic measures were undertaken through proper legal channels? How can you not have "independently verifiable" records for transfers and reimbursements? These actions have "criminal" written all over them.
(2) FUQI's directors appear to have been sleeping at the wheel. It seems that the chose to look the other way. On the front line is Pan, who seems to have given tacit approval to Chong.
(3) The fact that a reputed auditor like Marcum has not resigned and is willing to get drenched in this stench is baffling to me. This is the only part that is the silver lining of this whole mess.
(4) Chong's $150K fine and FUQI's $1M settlement are nothing more than a slap in the wrist. When you consider the fact that US shareholders are looking at $100M loss of equity, 2+ years of pain and agony due to this shell of a company, it looks like Chong will be laughing all the way to the bank. I think the SEC could have done more to make this company a poster-child, but opted for a quick settlement.
(5) Since Chong is Chinese, maybe the SEC was unable to prosecute him fully under US laws. Also, this is a civil action and the SEC likely settled for a small number in view of various factors, namely a micro-entity that has no US presence and is managed by a Chinese CEO.
(6) I hope the case is taken up by a US law firm in a class action. This is where it may get dicey. The private lawyers will be able to spend more time digging dirt, but there might not be anything left for US shareholders when the dust finally settles.
(7) It is unlikely that the company will ever regain trust of investors.
(8) I have suffered a small loss, but learnt my lesson.
How much money can we still get back from this? I guess after tons of lawsuits and other penalties. There is no penny left. What a disappointment! Lesson learned. Should never invest in Chinese stocks anymore.
First of all, I want to see this as a positive move in that we are no longer in complete darkness. Settlement will pave the way for further release of information either through news release or shareholder meeting which I view more likely as a means to pressure management rather a real event I expect to happen.
Go-private deal will be the best possible outcome for minority shareholders. While it is possible as evidenced by many successful precedents including HRBN, CSR, HOGS, FSIN and probably YONG, FUQI's case is a little different and more complicated. Relisting is not impossible but FUQI will have a hard time to sell to western investors, so delisting, go-private and relisting somewhere else makes more sense.
I believe we are seeing a little light from the end of the tunnel now, but I will not hold my breath for any super quick resolution.
How could this be a positive move? Read the SEC complaint, 63% of the return transfer money ($84.6MM) can not be verified independently (in other words, you have to trust Chong's words that it is actually returned). Chong really have committed a serious fraud and stolen shareholders money. And I believe that is the main reason why SEC served FUQI well notice and eventually revoked the registration.
Nobody will buy this company. No exchange will accept this company. And Chong really has not lost much. What a shame.
Chong is barred from serving as a director or officer for five years. He was personally fined $150,000.
Because FUQI and Chong agreed to this, it seems they may be looking for a "clean start". Privatization perhaps? They must have a plan which as yet remains secret.
Now, this one step forward to solve their unsolvable problem which Mr. Chong fined is very cheap otherwise he might go to jail. So this is behind us. What is next?
no trading? he have to go privatization before going to HK exchange,
Now what price? are we at the mercy of his pricing. He is a #$%$ to me.
Well, well, well... This means Chong is no longer Chairman or a director. Someone who speaks Chinese should call Charlene and find out what the company is doing to issue audited financial statements. This uncertainty over the SEC actions regarding the Cash transfers was the stated reason why Marcum said they could not sign off on the financial statements. My guess is that they will issue soon and then Chong will offer to buy the company. We discussed the minority shareholders protections previously and need to dig out those posts again. But as I recall a majority of the minority shareholders need to approve the buyout. If this is correct, there could be a silver lining yet. On the other hand, there are a lot of lawsuits outstanding that may need to be resolved before a buyout can take place. At least Chong is out, although Pan is probably in his pocket.