Xu's explanation for his departure from the Nasdaq is simple: It was all about getting a raise. "I wanted to make more money," Xu says. "I wanted to pursue my career. I really love investment banking and listings. I'm freelancing. I've got four companies headed in the direction of the Nasdaq. I'm also helping companies do RTOs and go to the Nasdaq, NYSE and U.S. There are so many companies even now considering and wanting to go to the U.S." Xu isn't alone in facing criticism from short sellers who target Chinese reverse mergers. His predecessor at the Nasdaq in China was Lawrence Xiao Xia Pan, who served in the position from 2005 until 2007. Pan himself may have steered clear of conflicts, but his wife, Mary Meiyi Xia, has been heavily involved in RTOs and stock uplistings, SEC and other public records show. In the late 1990s, Xia was a director at Asia Electronic Holdings, a company headed by China-based entrepreneur Du Qingsong, who was later arrested by Chinese authorities related to charges of conducting fraudulent investment schemes and incarcerated. Xia also partnered with Qingsong as co-founder of a securities firm, Asia Pacific Securities, according to Asensio's research. In 2004, Xia became head of China operations at Bio One, a Florida-based company then involved in a complex RTO transaction with several China-based firms. Bio One's stock registration was revoked in 2005 by the SEC, which cited materially false information in regulatory filings among other findings. Xia was not named in the 2005 SEC order. Xia could not be reached for comment. When reached by phone and asked about his duties at the Nasdaq, Pan immediately hung up. He did not respond to further requests for comment. The Nasdaq also declined to discuss any issues related to Pan, citing personnel policy. Speaking in general terms about Chinese RTOs, Xu commented that China lags the U.S. in terms of regulation, compliance and transparency. He rejected the notion that RTOs are problematical as a category. Any surprises, he says, are due more to shoddy research by professionals in the U.S. than to deception. "What the hell were the U.S. lawyers and U.S. accountants doing? They were supposed to be doing their due diligence," Xu said.
Shares of SmartHeat (Nasdaq:HEAT) have taken a tremendous swing upward. The stock is trading at 65 cents as of 10:46 a.m. ET, 22.6% above Tuesday's closing price of 53 cents. Volume is at 47,367, 0.1 times the daily average of 474,400.