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Small Cast Stars in China Reverse Mergers

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Xu rejects all of this. He says that, as the chief representative for the Nasdaq in China, he was often in contact with bankers and promoters working on reverse mergers, including Li Ming. He explains that such contacts were necessary and proper, but have caused him frustration nonetheless.

"Because of Benjamin Wey, my name has been implicated," Xu said by telephone from China. "I only met him twice -- once at my office and another occasion at a seminar for SmartHeat. I can't even properly remember what he looks like. When I saw my name implicated, I said 'My God.' I couldn't believe it. I really couldn't believe it."

For his part, Wey says he has no relationship with Xu.

"I met that guy twice in my life," Wey says. "I don't know what he does. I don't know what he says. I don't know him. It was a casual two meetings."

In one Web posting critical of Xu, Asensio pointed out that Wey was censured by the Oklahoma Department of Securities in 2005, for recommending stocks to investors without disclosing the consulting agreement he had with the companies. Wey signed a settlement agreement, but did not admit the charges. He now says that the censure was motivated in part by politics.

"You had somebody in the Department of Securities in Oklahoma in the mid-1990s who was very loud and clear: 'We do not want Oklahoma to have a reputation of doing business with communist China. And your firm is doing business with communist China.' That was the sole reason. There is no other reason behind it," Wey told TheStreet in a recent interview.

Wey returned fire at Asensio, pointing out that the noted short-seller was censured by the NASD in November 2000 and fined $75,000 for reporting and advertising violations. A 2006 NASD decision barred Asensio from association with any NASD member. Asensio said this action is before the U.S. Court of Appeals.

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