NEW YORK ( TheStreet) -- Two more Chinese small-cap companies saw their shares halted this week as the scandal surrounding stocks hailing from the People's Republic showed no signs of abating.

First, it was China-Biotics ( CHBT) on Wednesday. Then, on Friday, Nasdaq suspended shares of Yuhe International ( YUII), a "leading supplier of day-old chickens raised for meat production."

Fourteen Chinese stocks listed on major U.S. exchanges are now halted. Some of the suspensions have lasted nearly three months as exchange officials sort through allegations of accounting chicanery, mostly lodged by audit firms that abruptly resign.

The odds of maintaining a listing in the wake of a halt appear increasingly poor. Of the halts since the beginning of the year, exchanges have booted nine companies' equities to the over-the-counter markets, where values are typically and predictably decimated.

The Yuhe suspension came after the company held what one analyst called an "astonishing conference call" Friday morning to address allegations made by a short- seller group a day earlier. The group, called Geoinvesting, said it had unearthed evidence that Yuhe had misled investors about an acquisition of 13 chicken farms said to have occurred in 2009.

On the conference call, company executives denied that accusation, but admitted that they had failed to disclose that the acquisition hadn't gone through. As part of the purchase agreement, Yuhe has said that it made a down payment of 80% of the purchase price, or $12 million. But when the seller decided to spike the deal, Yuhe's chairman and CEO, Zhentao Gao, decided to put the $12 million into a private bank account, the company's CFO and COO said during the conference call Friday. The executives also said that, in place of this failed deal, Yuhe had gone ahead and purchased 11 different farms from a separate seller, using that $12 million sum.

"During this entire time, Yuhe continued to claim that business was usual and that the acquisition from Dajiang did go forward," said Rodman & Renshaw ( RODM) analyst Lewis Fan in a note Friday afternoon. Fan wrote that Yuhe's failure to disclose this information was "perhaps a face-saving measure."

"We are dumbfounded by the events that have taken place," Fan continued in the note. "If true, what the company, and more specifically, the company CEO, has done, could be serious violations of securities regulations."

Rodman, which also suspended its coverage of Yuhe on Friday, is normally a China stock bull by dint of its role as underwriter of scores of Chinese securities, including a $25 million follow-on offering of Yuhe shares in October 2010.

Yuhe's stock last traded at 9:38 a.m. on Friday. The quoted price was $1.20, down 76 cents, or 39%, from the previous close.

The halt in Yuhe shares comes two days after China-Biotics, long a target of short-sellers, failed to file its 10-K annual report with the Securities and Exchange Commission after its auditor refused to sign off on the numbers. Nasdaq halted trading in the stock on Wednesday after the close.

The reasons for the auditor's refusal were vague but nonetheless of a piece with an unfolding pattern. China-Biotics' audit firm, BDO Limited of Hong Kong, told the company in a June 10 letter that it had "identified certain serious issues as part of its ongoing audit work," according to China-Biotics in its Wednesday filing.

Other Chinese companies facing trading halts this year have seen their auditors allege that executives colluded with their banks to forge bank documents in a bid to fool auditors about the size and health of those businesses. Those types of allegations, which would seem to support the suspicions of short-sellers who say they've been unearthing fraud at U.S.-listed Chinese companies for more than a year, have erased investor confidence in the sector.

Unlike many other cases this year of a Chinese company failing to file its annual report, BDO hasn't resigned.

China-Biotics, which has denied charges of wrongdoing made both by short-sellers as well as reports in the Chinese business media, said its audit committee is "investigating the issues" raised by BDO this time around and is "working to take all of the actions and to provide the requested information to BDO as promptly as reasonably practicable."

Investigating Chinese Reverse Mergers

BDO has audited China-Biotics' last two annual reports, giving its seal of approval for both. BDO Limited, though an affiliate of the respected global accounting firm BDO International, has given its imprimatur to a handful of U.S.-listed Chinese companies that have run into trouble, including one of the most brazen frauds to emerge on American capital markets from the People's Republic: China Expert Technology, a purported IT consulting firm whose executives simply disappeared into China after raising tens of millions by selling equity to U.S. investors. The SEC revoked China Expert's securities registration in March.

When Nasdaq issues a "T12" halt, it means that the exchange has reached out to the company for more information and is, in effect, investigating the matter for a possible delisting. A China-Biotics spokesman didn't respond to a request for comment Thursday, but in a press release it said it is "working to provide the information and explanations that have been requested by NASDAQ as promptly as practicable in an effort to satisfy NASDAQ's concerns so that it may permit the resumption of trading of the Company's common stock."

China-Biotics was among the highest-flying of the Chinese companies that gained access to U.S. capital markets through a controversial method called a reverse merger, rather than an initial public offering. The company conducted its reverse merger in 2006, folding itself into a shell company with a stock registration.

As with most reverse-merger companies, China-Biotics shares first traded on the over-the-counter markets before "uplisting" to the Nasdaq in October 2008. Aiding in that process were China-specialist funds based in the U.S. such as Pope Asset Management, of Memphis, Tenn., and Chinamerica, of Richardson, Texas, both of which made private-placement investments in the company.

Pope has made early investments in at least 15 Chinese reverse-merger companies, including Jiangbo Pharmaceuticals ( JGBO), whose shares were halted on May 31, China Ritar Power ( CRTP), whose shares were halted on April 18, and Universal Travel ( UTA), whose shares were halted on April 12.

Reached by phone, Pope Asset's chief, Bill Wells, declined to comment.

The SEC last year began an investigation into allegations of ubiquitous fraud among U.S.-listed Chinese small-caps, particularly reverse-merger companies.

Many such stocks have drawn interest from sophisticated U.S. institutional investors. Wellington Management, for example the enormous investment adviser with more than $600 billion in client assets under management, owned more than 8% of China-Biotics outstanding shares as of March 31, according to Edgar Online.

China MediaExpress, an advertising company accused of accounting fraud, received an anchor investment from the fund of former AIG ( AIG) CEO Hank Greenberg. On the Pink Sheets, MediaExpress stock now trades at $1.82.

China Integrated Energy, halted in April at $1.84 after having spent 2011 in severe decline (it had been as high as $7.60 on Jan. 3), began trading again earlier this week after a nearly two-months halt. It closed Friday at 76 cents.

Douyuan Printing, whose big holders included Calpers, was summarily delisted by the NYSE without a halt first taking place. Its stock last traded on June 15 at 45 cents, also quoted on the Pink Sheets.

-- Written by Scott Eden in New York

>To contact the writer of this article, click here: Scott Eden.

>To follow the writer on Twitter, go to http://twitter.com/ScottEden.

>To submit a news tip, send an email to: tips@thestreet.com.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.