In Reverse Mergers, David Feldman writes that the WRASP process "may indeed provide another innovative, clean, and legitimate alternative to a traditional IPO for a company ready to trade on a major exchange."

That doesn't appear to have been the case for a Hong Kong distributor of watch movements called Asia Time Corp. ( TYM), one of WestPark's earliest WRASP deals. Asia Time's stock began trading on the Amex in February 2008 after raising funds from the likes of banking giants ABN Amro and HSBC ( HBC). The stock shot as high as $8.50 just weeks after its initial offering, heights it would never regain. Not a year later, the company abruptly went dark. Communication ceased with the SEC and with the Amex, which finally struck Asia Time's stock listing in April 2009. WestPark says the company relied heavily on bank credit to fund its inventory, and was simply forced to go out of business, "a casualty of the global credit and financial crises."

Some of WestPark's other WRASP deals have performed better. Take Hong Kong HighPower ( HPJ), a battery maker based in Shenzhen. WestPark arranged for a private placement, selling 2.9 million shares for $1.76 each to a small group of investors. Its stock, after a public offering, started trading on the Amex at $3.25 in June 2008. Though it declined to $1.25 amid the financial crisis, HighPower's shares suddenly exploded in the fall of 2009, shooting nearly to $10 in early 2010 before commencing a long slide from which it has yet to recover. The stock was trading recently at $3.10. The company, as it happens, recently filed a notice with the SEC on March 31, saying it needs more time (not longer than 15 days, it said) to file its 10-K. But its auditor doesn't appear to be MaloneBailey; the company's audit a year ago was conducted by a Hong Kong-based firm called Dominic K.F. Chan & Co.

Rappaport's mission to get the WRASP deal structure up and running as a viable business wasn't easy. He spent two years trying to convince regulators to approve the procedure, according to Feldman in Reverse Mergers. (Feldman notes in the book that his law firm helped WestPark set up the Form 10 shells used by the firm in its WRASPs. Reached by TheStreet, Feldman declined to comment further on the WRASP process.)

Even while Rappaport was attempting to gain approval for his invention, some of his brokers were engaging in behavior that would later be sanctioned by the Financial Industry Regulatory Authority, or FINRA, which regulates broker dealers.

In May 2010, FINRA imposed a censure on the firm, including a $400,000 penalty, for failing to supervise brokers with histories of disciplinary action. Further, according to FINRA, brokers at a WestPark branch office on Long Island "churned customer accounts and engaged in unauthorized and unsuitable trading in multiple accounts." (WestPark has since shuttered that Long Island office.) According to a FINRA press release, several of the brokers involved in the sanctioned trading came to WestPark from the infamous Long Island boiler room Stratton Oakmont, whose principals pleaded guilty to pump-and-dump stock fraud in 1999, as well as other barred broker dealers. It was WestPark's third FINRA disciplinary action since 2004.

WestPark says it fired the brokers cited by FINRA after less than a year on the job.

Also, the firm pointed out, they weren't involved in any of WestPark's Chinese deals.

-- Written by Scott Eden in New York

This is the second of a two-part series on Westpark Capital, accounting firm MaloneBailey, and recent allegations of improper accounting at a handful of Chinese companies. Click here for Part 1 of this story.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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