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SEC Probes China Stock Fraud Network

Stocks in this article: RINO CSKI FUQI FFHL CYXI TYM BBCZ NYX NDAQ

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Bodisen Biotech (BBCZ): This maker of organic fertilizers saw its shares delisted from the American Stock Exchange in March 2007, partly based on alleged inaccuracies in its filings regarding the role of stock promoter Benjamin Wey, president of New York Global Group. Shareholders filed lawsuits accusing Bodisen of securities fraud, but their complaints were dismissed. Wey has claimed that irresponsible short-sellers sent the company into a tailspin. The stock peaked at about $20 in 2006. Its OTC shares traded recently at about 50 cents. Bodisen did not respond to requests for comment.

Shanghai Medical Technology: This operator of dialysis clinics raised $12.5 million in a 2007 PIPE deal. The money never made it to the clinics -- it was transferred instead to the personal account of one of the company's directors, according to a source involved in the deal. The company appears to be defunct. Multiple attempts to reach company officials were unsuccessful.

Fuwei Films (FFHL): This manufacturer of industrial plastic films went public in 2006 through an IPO on Nasdaq. In 2009, the company disclosed that three executives had been convicted in China on charges that they had illegally taken control of the business there. Shareholders alleged in a lawsuit that Chinese authorities were investigating the hijacking of the company while stock promoters in the U.S. hyped the new issue. The suit charged that company officials had provided false and misleading informaton relating to the company's IPO. One of the executives arrested in China has been sentenced to death there, and the two others to life imprisonment, the company has said. In September, Fuwei and its co-defendants -- senior officials and directors of the company -- settled the shareholder suit, agreeing to pay $2.15 million. Fuwei still maintains that the allegations in the suit are "without merit." The stock, as high as $15 in 2006, now trades around $2.

China Yingxia (CYXI): This health-food company was founded by a nurse-turned-entrepreneur. It reached a market cap of more than $900 million and then in 2009 stopped filing statements to the SEC. Information remains scarce, but according to one person familiar with the company, the nurse is now in jail in China for selling unregistered securities to individuals there, a violation of the country's securities laws. Attempts to reach the company were unsuccessful.

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