China MediaExpress and Duoyuan Printing listing news added to this update.BOSTON ( TheStreet) -- Chinese small-cap stocks got walloped in the first quarter, as concerns over the accuracy of financial statements filed with the Securities and Exchange Commission drove share prices lower. U.S. equities had their best first quarter in more than a decade, with the benchmark Dow Jones Industrial Average notching a 6.7% gain. Some Chinese small-cap stocks, on the other hand, have dropped as much as 75% this year, felled by the resignation of auditors to the restatement of earnings to fraud accusations by short sellers, who profit from a decline in share prices. In contrast, large-cap Chinese stocks trading on U.S. exchanges as American Depositary Receipts, or ADRs, are outpacing the broader market. Baidu ( BIDU) has surged more than 40% this year, and China Unicom ( CHU) has jumped 21%. Each company is valued at more than $40 billion. Many small-cap shares of Chinese companies gained listings on the Nasdaq and New York Stock Exchange through a back-door process called a reverse merger. Critics argue that the process allows companies based overseas to merge with shell companies in the U.S., circumventing scrutiny they would usually face by going public through a rigorous initial public offering. In the case of a Chinese reverser merger, or RTO, the U.S. shell company acquires the Chinese company, essentially taking the Chinese company public with little regulatory oversight. In December, TheStreet reported that the Securities and Exchange Commission is investigating allegations that U.S. firms and individuals have joined with partners in China to steal billions of dollars from American investors through stock fraud involving Chinese RTOs.