In October 9, 1992, brilliance China listed on the New York stock exchange, opened a prelude to Chinese enterprises listed overseas. More than ten years, hundreds of Chinese enterprises "going out" to USA, Hongkong, Singapore, the UK listed on overseas markets. According to statistics, as of December 31st 2011 , China Company, NASDAQ has 255 Chinese listing Corporation, including the New York stock exchange 60, NASDAQ 195. Chinese enterprises "going out" to America listed, benefits, ^[1]But it also faces many legal risk, worthy of our country has been in the attention, research and prevention America listed and fitting to the America listed enterprises.

One, Chinese enterprises to USA listed the main legal risk

In a word, the main legal risks in the China enterprises to American listed risk, group litigation of securities illegal punishment risk, ^[2]Several aspects of delisting risk, risk of short sales and intermediary fraud risk, we analyze as follows.

(a) securities group litigation risk

American as the world's most powerful and most vibrant capital markets, one of the most important experience is securities class action constitutes a powerful strength of supervision on securities violations, under the listing Corporation and its manager is always in Securities Litigation threats. Professor Loss believes America securities law authority, America federal securities laws against fraud remedies, largely depends on the group action system. Securities group litigation because of its exquisite system and strong investor protection function, be regarded as executive USA federal securities laws "the most powerful weapon". ^[3]

The so-called group litigation, is when the dispute occurs, damage to the interests of many parties in order to protect their own interests to form a group, a group of one or several people with common interests on behalf of other members of the group of prosecution or respond to a lawsuit, and the court's ruling on all members of the group are binding. The advantages of the group litigation is to improve judicial efficiency, avoid duplication of proceedings and make contradictory judgments. American "federal rules of civil procedure" provisions of article twenty-third, group litigation judgment for all members of the group, unless the member selection is not as members of the group. The article fifth provisions, the court not to be allowed, group litigation may not withdraw or reconciliation. Thus, members do not appear in court in the procedure will automatically be included in the group, the group litigation becomes feasible and economic.

Study American securities group litigation reform history, we discover not hard, protect the legitimate rights and interests of investors has been the aim of system. In 1995, America passed "the Private Securities Litigation Reform Act", aims to rectify the private securities litigation system to encourage the plaintiff lawyers filed a speculative group litigation and defendant regardless of litigation has no value imbalance settlement between, through modification of the securities law and the Securities Exchange Act of the relevant provisions to achieve the balance of interests, in order to achieve the effective law Securities Group Litigation abuse of control, to restore public confidence in capital markets. ^[4]In order to curb the lawyer to avoid "the Private Securities Litigation Reform Act", USA in 1998 through the "Securities Litigation uniform standards act" provisions of the federal court, the group litigation of securities exclusive jurisdiction, and by the specific system design and effectively eliminate the counsel for the plaintiff to most legal exploits. In 2005 American passed "group litigation justice law", first established in the federal courts to initial group litigation jurisdiction and transferred to the jurisdiction, and perfect the rules of group lawsuit reconciliation.

Since 2001, china.com in American first by securities group litigation, there have been NetEase, Chinese life, UT Starcom, China Aviation Oil, Sina, focus and a number of China in USA listing Corporation filed a class action, but also show a trend of rapid expansion. According to statistics, 2001-2006 years, 6 China Company encounter group litigation; in 2007, 10 China Company controlled; in 2008 there were 4 China Company sued 2009 years; 3 China Company sued China Company sued in 2010; 13 , 2011 for the securities class action lawsuit China Company has soared to 39, accounting for the total USA 2011 securities class action 18%. ^[5]In 2007, with 2011 years is the China Company peak encounter group litigation, group litigation China Company suffered proportion reached 14.34%.

China encounter group litigation in the United States listing Corporation, not only caused huge expense in litigation and compensation, ^[6]Shares fell, the direct losses, but also make the company image, affects the ability of future refinancing.

According to the American listing Corporation survey of encounter group litigation China, most enterprises are due to improper information disclosure untrue, misleading information, omission, disclose the reasons and financial restatement indicted: in 2004, China life because of not disclose bad news in 2005, Sina was sued; "did not disclose the correct information, the publication of false information to mislead the investors" for the same year, the defendants; for failure to timely report to investors because of changes in the labor market and the emergence of a Chinese advertising revenue decline in the news lawsuits; in 2007, the giant network in the book and the listing application, and was charged for two important operational data did not disclose its flagship game "journey" in 2007 Online the third quarter fell in fact; in 2007, Focus Media due to several deal were not disclosed Focus Media under the Internet advertising service sub company, these transactions lead the company gross margin decline and the defendant. There are a lot of cases and so on, but the later does not seem to be from these pioneers of mistakes.

In the group litigation cases, china.com case, NetEase case and China life case are three relatively large impact on the case.

1, china.com case

China.com is our country in American listing Corporation in the first encounter group litigation of company.

In July 16, 2001, during the Wolf Haldenstein Adler Freeman & Herz LLP America representative of Law Corporation in July 12, 1999 to December 6, 2000 purchase of china.com stock investors filed a class action lawsuit to American area court for the Southern District of New York, accused of china.com company managers and underwriters Lehman Brothers, Merrill Lynch, Bell Sten fraud.

The lawsuit alleges that the defendant violated the USA federal securities laws in the process of IPO, did not disclose some important information to investors, causing losses to investors. The lawsuit, the underwriter china.com shares issued, some investors had to secretly ask for and accept extra commissions to these investors, and placing a considerable amount of china.com company public offering of shares. The Underwriters and the part of the customer agreement, agreed to these customers placing china.com company stock, the condition is, the customer must stock according to the predetermined price Holdings china.com company in the stock issue. This makes china.com stock manipulation, artificially reached a very high level, underwriter and some customers so obtained huge profits.

In October 28, 2011, the NASDAQ announced, china.com from the date of the suspension of trading. Prior to October 5th, china.com filed for bankruptcy. Thus, China first U.S. listed Internet Co, the first encounter group litigation of company, and in 12 years to become the first filed for bankruptcy in the United States listed China Internet Corporation.

2, NetEase case

In October 22, 2001 and 23, American two law firm Milberg Weiss Bershad Hynes & Lerach LLP and Gailey Geller Bowman & Coates LLP has announced that from July 3, 2000 to August 31, 2001 during the purchase on behalf of NetEase America depository receipts (ADR) purchase to NetEase presents the group litigation. The prosecution objects include NetEase company of Ding Lei, Li Jinghui and He Haiwen, NetEase underwriters Merrill Lynch, Pierce, Fenner & Smith, Deutsche Bank Securities, JPMorgan securities (Chase Securities), Salomon Smith Barney and UBS Warburg LLC. The two firms the charges against the defendant in violation of the "Securities Act of 1933" the eleventh chapter twelfth (a) (2) and section fifteenth and "1934" the Securities Exchange Act of tenth (b) and 20 (a) terms, because during the August 31, 2001 in July 3, 2000 released a series of information to mislead investors to the market. At the same time, NetEase company, Ding Lei (the founder and architect), Li Jinghui (former chief executive lawsuit and former director), He Haiwen (former chief financial officer and former director of the company) also published to prove, active defense. The above events, the NetEase following china.com, became the second Shareholder Class Action by listing Corporation in the United States, caused widespread concern in the industry. ^[7]

The case eventually reached a settlement, NetEase to buy NetEase stock between July 3, 2000 to August 31, 2001 investors a one-time payment of $4350000 in damages.

3, Chinese life case

In December 17, 2003, Chinese life are listed and traded on the New York stock exchange in December 18, 2003, China; life is traded on the Hongkong stock exchange.

In January 30, 2004, Peng Bo News Agency (Bloomberg) news reported that, China National Audit Office has audited more than 35000000000 yuan (RMB) from Chinese life-insurance company and ICBC payments are illegal diversion. Affected by this, China life in America Nasdaq stock in February 5, 2004 at $26.63 per share. Chinese life later issued a statement to the America securities and Exchange Commission statement (SEC) to submit a Form 6-K report, pointed out China National Audit Office out of the question is attributable to the former Chinese life-insurance company, which has nothing to do with the defendant Chinese life. After the announcement, in February 17th Chinese life's shares rose to $30.10 a share.

From March 16, 2004 to May 14th, there have been American investors filed a lawsuit against the nine group Chinese life and some directors. The nine group litigation plaintiff is during September 17, 2003 to April 28, 2004 in American securities exchange to buy Chinese life stock American securities investors and foreign investors to buy Chinese life shares on the Hongkong stock exchange. The plaintiff to America federal court for the Southern District of New York filed a lawsuit, think China life publication of false and misleading information and deliberately omitted important fact, so prices artificially high China life. The plaintiff accused Chinese life in violation of the Securities Exchange Act of 1934 American "" tenth (b) funds, the plaintiff should therefore suffered losses shall bear the responsibility for compensation.

In September 3, 2008, American Federal District Court Southern District of New York, is America securities investors and foreign investors in Securities Litigation China life information disclosure fraud verdict, dismissed the plaintiff's claim, that the alleged lack of basis. ^[8]2009 year in January, with the plaintiff moved the voluntary withdrawal of appeal for American, the second US circuit court approval, a judgment has become final judgment. Previously, USA SEC ended in 2006 with the informal investigating the matter, also did not take any enforcement measures. China life lasted more than 4 years of the group litigation, come to an end.

4, CNOOC case

In March 1, 2012, USA law firm Faruqi&Faruqi (F&F) issued a public notice, because CNOOC (NYSE: CEO, HKEx Code: 0883) and its executives in the Gulf of Penglai oil spill in violation of the federal securities laws on information disclosure American terms, so the collective lawsuit led by CNOOC, and open in its the website for January 27, 2011 and September 16th during the purchase of CNOOC securities investors to participate in collective action.

As the largest offshore oil producer CNOOC in 2001 respectively, which are listed on the NYSE and Hong kong. In June last year, to ConocoPhillips as operator, CNOOC as the controlling shareholder of Bohai Penglai 19-3 oil field of oil spill is serious, CNOOC in accident nearly 1 months after the official disclosed information.

From F&F's Web site, CNOOC Penglai 19-3 oil field in June 4, 2011 and in June 17th 2 oil spill events have occurred, but it was not until July 5th that the State Oceanic Administration China disclosure of relevant information to the outside world. Since then, the extent of the damage effect of CNOOC is down and underestimate the spill and will lead to the operation of the company. While CNOOC shares by the impact of oil spill incident in 2011 September for fall. In September 6, 2011 CNOOC and ConocoPhillips announced, they will jointly set up a fund to solve the environmental impact of the Gulf of Bohai oil spill, the impact of this news, CNOOC's $9.39 fell in September 6, 2011; in September 18, 2011, the two companies also announced the establishment of the second Gulf of Bohai fund, affected by this, CNOOC shares are down 6.85 dollars.

The firm said, CNOOC underestimated the effect on the oil field. Bohai oil spill accidents have caused enormous damage to the environment, CNOOC will follow on in clear responsibility and not in the oil, CNOOC reported "non operators" identity. In addition, CNOOC is not in accordance with the general principles of accounting and adequate provision of debt.

In March 4, 2012, may suffer from American group action, CNOOC officials said, "has not received a formal legal document, if the relevant information will be released in a timely manner."

(three) securities illegal punishment risk

USA is one of the world's most severe on capital market regulation of the state, in the course of the development of the capital market, has formulated a series of strict legal rules. These rules include the "Securities Act of 1933", "the Securities Exchange Act of 1934", "Sarbanes - Oxley act", "Dodd - Frank act" and America securities and Exchange Commission (hereinafter referred to as SEC) rules and the New York stock exchange, NASDAQ's self regulatory rules. The legal rules of the listing Corporation (including China United States listing Corporation) put forward strict information disclosure, corporate governance and standardize the operation requirement, if Chinese United States listing Corporation in violation of the above provisions, will be subject to severe disciplinary, administrative or criminal penalties. Therefore, Chinese United States listing Corporation will face higher risk securities illegal punishment. The influence of "Sarbanes - Oxley act," and "Dodd - Frank act" on the Chinese United States listing Corporation is very direct and obvious, attaches great importance to cause these companies and their directors, senior executives.

With the American Enron Corp, globe telecom companies to disclose accounting fraud scandal, exposed the drawbacks of supervision system of securities in American. In July 30, 2002, President USA Bush signed by congressional Democrats and Republican Senator Oxley Sarbanes drafted and passed by both houses of the "Sarbanes Oxley act". "Sarbanes Oxley act" from the strengthening of information disclosure and the accuracy of financial accounting, to ensure the independence of auditors, and improve corporate governance and other major aspects of the more significant modifications to the securities company and the existing legal, accounting, and according to the listing Corporation to increase the number of strict legal requirements and provisions of the administrative measures, criminal penalties more strict since, as American economical the great depression in twentieth Century 30, American formulation of the widest scope, the most severe punishment measures of securities supervision legal. "Sarbanes Oxley act" scope includes not only the American domestic listing Corporation, is also covered in the United States listed non-US companies. In the "Sarbanes Oxley act" in the provisions, the most important influence on the United States for 404 terms China listing Corporation ^[9]And the relevant criminal liability clause. ^[10]

In July 21, 2010, President Obama signed America "Dodd Frank Wall Street reform and Consumer Protection Act", since the Great Depression American scale is biggest, the widest range of financial reform legislation. In the "Dodd Frank act" in the United States, China listing Corporation most important provisions for corporate governance democratization and compensation management terms ^[11]And the relevant authorized the SEC to improve the law report reward mechanism of clause 922.

In May 25, 2011, according to the provisions of "Dodd - Frank act" of section 922, USA SEC released new rules about illegal report incentive mechanism, to assist SEC provisions by winning the prosecution of illegal acts in Securities and acquire compensation amount of more than $one million informants to give financial reward. According to the regulations, if the report's information leads to enforcement action, and SEC fees collected more than $1000000, the report can obtain fine 10%-30% as a reward. The provisions of the former, SEC reward only in cases of insider trading, and bonuses shall not exceed a maximum penalty of 10% related law enforcement action. The new regulations also expand the scope of the report. Previously only report the insider trading, and after the implementation of the new regulations, report up to three kinds of illegal financial acts of market manipulation, false disclosure of financial information opaque and information. Informants if according to this act shall be rewarded, voluntary to provide SEC related subject to illegal evidence of primitive, reliable.

The awards program department report according to the prior to the promulgation of "Dodd - Frank act" enacted 922 terms. SEC chairman Mary L. Schapiro said the report system can be very good to help SEC resources limited mechanism more effective information on violations of the first hand data. She also said that although the SEC has received a report and clues, but until the "Dodd Frank act" enacted after the 922 clause, SEC received the information quality is greatly improved. Therefore, SEC hopes to continue this favorable change through the establishment of the mechanism. In order to effectively implement the regulations, SEC the identities of informants, report mode in detail and description. And especially to the internal audit insider report program made special provisions. Rewards allure men to brave danger.

SEC day in 2011 November released a report in a new report, formal operation mechanism to September 30th fiscal year 2011, the last day of the 50 days of the beginning of August 12, 2011, SEC received a daily average of nearly 7 report information, received a total of 334 report information, a significant increase over the pre reform, for investor protection fund balance paid informants bonus $453000000.

The new rules American SEC related illegal report reward system are introduced, the sense of increased China United States listing Corporation securities illegal punishment risk.

According to statistics, 2001-2010 years, a total of 42 Chinese United States listing Corporation suspected 83 cases of violation of laws and regulations, involving 91 illegal behavior. Alleged violations of USA China Company listed China Company a total of 16.7%, the average of alleged illegal China Company suspected of 2.17 illegal behavior. In 91 suspected of illegal acts, including 41 false statement behavior, 16 fails to submit the financial statements in accordance with the provisions of the 12 act, IPO document fraud, insider trading behavior in 7, 6 market manipulation, 3 corporate governance irregularities, other illegal behavior 6, accounted for more than 45.05%, 17.58%, 13.19%, 7.69%, 6.59%, 3.3%, 6.59%. In particular, UT Starcom for violation of American "Foreign Corrupt Practices Act" by the CSRC and the Ministry of justice USA USA each $1500000 fine.

The 83 suspected cases of violation of laws and regulations, collective action from investors as many as 39, the proportion reached 46.99%; from the auditor questioned 2; from solicitors litigation investigation before 2; from the debt (debt all custodian) question 1. In addition to the above, the remaining 39 cases received 41 penalty decision, the other 39 cases were received 41 penalties, including American punishment Commission Decision 22; the NASDAQ penalty 14; NYSE (including AMEX) decision 4; America department the punishment decision 1.

(three) the delisting risk

In USA, due to the implementation of "wide into severe out" of the securities market regulatory policy, the NYSE and NASDAQ are the implementation of the delisting system demanding, if the listing Corporation does not meet these requirements will face the huge risk of delisting. "New York Stock Exchange listing Corporation guidelines" section eighth "and the NASDAQ listing rule 5000 (" The Nasdaq Listing Rules 5000 Series, in April 13, 2010 started the implementation) detailed provisions of the respective delisting criteria.

1, the number of operations and liquidity standards

The NYSE and Nasdaq in order to maintain the quality of the listing Corporation management listing Corporation, maintain stability, ensure public participation from the listing Corporation, operating conditions and liquidity listing Corporation provides clear delisting standard number.

"Listing Corporation" New York Stock Exchange Guidelines specified in section eighth, the number of delisting standards include: (1) share distribution criteria: ① shareholders of fewer than 400 people; or the shareholders of fewer than 1200 people, and for the last 12 months of average monthly trading volume of less than 10000 shares; or the board of directors, senior management personnel or their close relatives (immediate families) and other concentrated ownership reached 10% of the shares held by shareholders, the public ownership is less than 600000 (if the trading unit less than 100 shares, the public float requirements will be correspondingly reduced). (2) the market value, operating income standard: according to apply for listed companies on the basis of accounting standards, the number of different standard listing Corporation delisting. But if listing Corporation stock was identified as less than $15000000 in 30 consecutive trading days average market capitalization, the NYSE would immediately start the suspension and delisting procedures. (3) stock price standard: 30 consecutive trading day average closing price of less than $1.

"The NASDAQ Listing Rules" provisions of the number 5000 delisting standards include: (1) the company's share price for the 30 consecutive trading day lower than market value conditions of the minimum quotation or public ownership; (2) the number of consecutive 10 trading days the stock market maker is lower than the continued listing standards; (3), in the national market, net tangible assets the market maker number, total assets, total operating income, such as public stock market falls below the maintenance listing standards, but at least the price of not less than US $5 exception.

2, corporate governance and information disclosure requirements of non standard number

The NYSE and Nasdaq especially for corporate governance put forward to make clear a requirement, protection reflected on the listing Corporation to strengthen the supervision of the legitimate rights and interests of investors.

"The standard corporate governance delisting New York Stock Exchange listing Corporation guidelines" section eighth mainly includes: (1) the general meeting of shareholders not proxy solicitations; (2) the listing Corporation or its management behavior violate the public interest of the society; (3) the NYSE to the relevant provisions of the audit committee is not sustained compliance; (4) breach of the listing agreement or other agreement entered into with new zealand.

"The standard corporate governance delisting the NASDAQ Listing Rules" provisions of the 5000 mainly includes: (1) the company has not set up the audit committee, independent directors is less than two; (2) the company is not scheduled to convene a general meeting of shareholders, with or without prior consultation with the agent and provide proxy statement at the general meeting of shareholders, or make any difference reducing or limiting voting decisions; (3) the company is not proper review of related party transactions, failing to examine possible potential conflict of interests.

In the disclosure of information, the NYSE and Nasdaq have made strict requirements, if the listing Corporation is unable to submit annual reports, quarterly or semiannual, or accounting for financial statements in a recent issue of the audit opinion as reserved opinions, negative opinions, unable to issue opinions or stressed "sustained attention" without reservations, or fails to timely, accurate disclosure of related information of company and its stock price, may be withdraw.

At the same time, the NYSE and Nasdaq delisting regulations are, be on the existence of fraud listing Corporation. If the exchange finds behavior of listing Corporation existing financial fraud, misrepresentation, fraud or manipulation of shares of the company, to promote fair, fair trade, protection of investors and the public interest, may suspend or terminate the trading of the company's shares.

The enactment of the delisting system strictly and resolutely carried out in recent years, USA two exchange listing Corporation delisting rates. Calculation, according to the WFE data of 2003-2010, the New York stock exchange's annual "delisting / listing" ratios were 125%. Over the same period, the cumulative listing of 1513 companies, 2401 companies delisting, the annual "delisting / listing" ratio as high as 171%, ranking first in the market in the first. It is for this reason, cause the number of listing Corporation NASDAQ rapid decrease in 2003, the listing Corporation stock for 3333, 2010 decreased to 2778.

In this background, our country has large delisting risk in USA listed also can hardly be avoided. According to statistics, in 2011 the total market value of China Company from the number, America exchanges delisting, even more than the same period in exchange America IPO company number, the total market value. In 2011 China delisting company number, the total market value of respectively 31, 7800000000 dollars (see Table 1). But this is a strong contrast, the 2011 annual domestic only 18 companies listed in USA, IPO total amount of $3000000000.

In 31 China Company in 2011 delisting, besides Tongjitang, royal network and other 9 companies for privatisation delisting reasons, other 22 are exchange delisted. And in these 22 delisted companies, in addition to part company because of long-term stock price less than $1 and a market capitalisation is low reason, most companies delisting because touched the delisting of governance, information disclosure, the NYSE or NASDAQ companies. Thus, the deep-seated reasons listed China Company in America delisting risk in the final analysis is mainly the Domestic Company governance structure is not perfect, non standardized information disclosure and other reasons.

Table 1:2011 in Chinese mainland enterprises America delisting (a total of 31)

The month codes stock exchange way

In March XSEL Xinhua sports and entertainment Nasdaq to Pink Sheet Market

In April the CTEK emerging good group Nasdaq to Pink Sheet Market

DYNP multiple printing NYSE to Pink Sheet Market

TCM Tongjitang NYSE privatization

In May CAGC Ari Taco Nasdaq to Pink Sheet Market

CCME China high-speed media Nasdaq to Pink Sheet Market

The June SDTH grand tech Nasdaq to Pink Sheet Market

NDAC Xinlong Asian AMEX to Pink Sheet Market

FUQI Fu Lin International Nasdaq to Pink Sheet Market

CELM Yue Pengcheng Nasdaq motor to Pink Sheet Market

CBEH Xi'an Baorun Nasdaq to Pink Sheet Market

CCDM century dragon NYSE to Pink Sheet Market

NIVS Na Weizhuang NYSE to Pink Sheet Market

CILE Chinese intelligent lighting NYSE to Pink Sheet Market

CRIP Ruida power Nasdaq to Pink Sheet Market

In July CHBT China biological Nasdaq to Pink Sheet Market

In August JGBO Jin pharmaceutical Nasdaq to Pink Sheet Market

CABLF holding Nasdaq to OCTBB

LGFTY Longtop NYSE to Pink Sheet Market

PUDA universal media industry NYSE to Pink Sheet Market

FLT music language China Nasdaq privatization

CPC Kang Peng chemical NYSE privatization

September WATG car Nasdaq to Pink Sheet Market

SBAY tens of billions of Nasdaq to Pink Sheet Market

CSR security technology Nasdaq privatization

In October, KEYP Keyuan plastic Nasdaq privatization

In November CFSG busulfan Nasdaq privatization

HRBN electric Nasdaq privatization

SNDA royal network Nasdaq privatization

In December, GEDU global Nasdaq privatization

CEU China education group NYSE to Pink Sheet Market

Data sources: SEC, America NYSE, NASDAQ websites.

1, because of non standardized corporate governance was forced to withdraw from the market

In 2007 through the backdoor listing of the Jin pharmaceutical is a typical case was forced to withdraw from the market because of the reason of corporate governance. In August 3, 2011, 2007 through the backdoor listing of the Jin pharmaceutical bulletin said, has received the letters to the delisting, the delisting formally on August 4th. NASDAQ delisting decision of the company mainly based on several reasons, such as the authorized the company and chairman of audit committee independence from internal investigation, audit committee is unable to due diligence, this caused the public interest concerns, in addition, the company failed to meet the listing criteria or the securities market act 1934 of legal liability and a member of the audit committee requirements.

2, because of non standardized information disclosure was forced to withdraw from the market

(1) was forced to withdraw from the market because of the disclosure of information is not timely reason

Non standardized information disclosure of reasons can be divided into the information disclosure is not timely and the disclosure of false information (suspected of financial fraud) two. Be forced to withdraw from the market because of the disclosure of information is not timely cause important case blessed Yee International case, Ruida power case, china.com case and emerging good case, emerging good for information disclosure is not timely by Nasdaq delisted after NASDAQ filed a lawsuit.

2011 March, Fu Yee International failed to disclose the results in 2009, received the notice of violation, and repeatedly delayed reporting time submitted, repeatedly violate the NASDAQ listing rules, finally failed to submit reports were to withdraw from the market.

In June 23, 2011, the NASDAQ also announced, Ruida power will be on June 24th was officially delisted, return the lowest Pink Sheet market. Previously Ruida power has received a delisting notice, but failed to submit an annual report and the first quarter of this year in the period report. Ruida power has said, in a variety of spending NASDAQ has become a huge burden on companies. Ruida power was founded in 2002, mainly engaged in lead-acid battery design development and production, in 2007 was listed on NASDAQ in February.

In November 17, 2011, received the NASDAQ delisting notice issued by china.com. Notice that the NASDAQ listing rules, because the 5101 clause in the public interest concerns, as well as china.com failed to timely submit the fiscal year ending in December 31, 2010 20-F spreadsheet files, ready to china.com NASDAQ delisting. In December 8, 2011, the NASDAQ announced the suspension of china.com stock on the NASDAQ listed, in force since December 12, 2011. China.com is eligible to apply for the resumption of trading in the OTC market, the final notice of withdrawal will be released after the introduction of related hearings and formal decision.

In July 13, 2010, emerging good by the New York International Group's force landing Pink Sheet Market (OTCBB), and in December 15th the same year the successful use of reverse merger transfer of NASDAQ market (NASDAQ). However, in January 13, 2011, listing only 1 months later, the Nasdaq, to emerging good a delisting warning, said the financial restructuring of the company failed to timely relevant to the Nasdaq stock market on 2010 submit completed in December, believes the company during the rotating plate application process no financing progress timely fulfill relevant disclosure obligations, is the company's 2010 at the end of a $20000000 financing deal there hide. Emerging Jia said, have to provide all the necessary information. In December 13, 2010, emerging good and institutional investors reached a value of $20000000 of equity debt agreement.

The Nasdaq market warning delisting, the emerging good price from $9 per share and ultimately fell to less than 70 cents. From the beginning of 2011 February, emerging good has a plea to NASDAQ listed on NASDAQ hearing appeals committee, audit committee, and the board of directors, until at the end of 2011 11, the final result of emerging good still is maintaining the delisting decision. At the end of 2, the NASDAQ Appeals Committee held hearings after emerging good defense, losing. In May 24th, the NASDAQ listed Audit Committee hearing and arbitration group judgement: emerging good delisting is not enough evidence to support. But 5 days later, the emerging good favor and be notified to re trial. At the end of 7, emerging good received notice of the Ministry of the law, a lawsuit. At the end of 11, the NASDAQ board to inform the final against emerging good, defense.

In January 5, 2012, emerging good in federal court in New York, the Nasdaq stock market, said its violation of regulations and legal procedures, resulting in emerging good reputation has been irreparable damage, and $220000000 market capitalization, the Nasdaq stock exchange requires the element of claim 300000000 (about 1894000000 yuan). At the same time, emerging good also to USA SEC submitted to the Nasdaq market discrimination and error delisting petition. In addition, according to the report, the government of Liaoning Province under the small and medium-sized enterprise department has sent a letter to the USA Secretary of Commerce and USA trade representative, please the relevant government departments American to impartial investigation, condemn and prohibit any discrimination on Chinese enterprises. The case is still in court proceedings.

(2) was forced to withdraw from the market because of suspected fraud causes

On suspicion of financial fraud was forced to withdraw from the market case with Rino case and China high-speed media case.

Since July 13, 2009, Dalian Rino officially in the global Nasdaq market transactions. In November 10, 2010, muddy water company publicly questioned Rino fraud, said Rino announced in 2009 to $193000000 in sales of only $15000000 of the actual report issued, but management embezzled tens of millions of dollars of public money, including $3200000 in America orange town (Orange County) to buy luxury real estate. The muddy water company also questioned Rino fictitious contracts, exaggerating the number of customers, 9 customers visit public disclosure that Rino's, 5 deny bought Rino products, including Baosteel, Laiwu Steel, heavy steel, Yueyufeng steel etc.. According to Rino's earnings, only Yueyufeng contract amount of $12700000.

To November 17th, Rino has 9 consecutive trading day decline, fell from $16.62 to $6.08 for a road, the cumulative decline of up to 63.42%. On the day before the suspension plate, there is a USA law firm SohMEr & Stark, LLC launched a lawsuit against Rino group.

Soon after, Rino admits in the securities regulatory agency to USA appeared in the file of audit failure. The company's chief executive, Zou Dejun clarified, and no 2 of 6 customer contracts signed in the Muddy Waters report in question, needs to be explained. But according to Auditing Company Frazer Frost to provide American sec documents, when asked about the other company contract, Zou Dejun admits that "there are about 20% to 40% is a problem". The auditor said, although the impact on the company can not be determined, but in March 31, 2008 to September 30, 2010 earnings will no longer use.

In December 3, 2010, the NASDAQ to Rino delisting notice is given. After a week of December 9th, Rino delisted and transferred to the pink sheet market, stock price plummeted from questioning a $15.52 to $3.15.

Chinese high-speed media is headquartered in Fujian city public traffic TV advertising operators, in 2009 September through a reverse takeover of listed in the United States in June, 2010, the board to nasdaq. DDT since 2009 as the third party audit.

On March 3, 2011, DDT put forward seven questions about Chinese high-speed media results in 2010, and sent a letter to the internal audit committee, but received no response. In March 11th, DDT terminated independent external audit work on Chinese high-speed media. DDT in his resignation letter said: Chinese high-speed media did not continue to cooperate with the DDT Audit Committee of sincerity, DDT has been on the board of directors of the company and the internal audit lose confidence. DDT also said: "before the audited annual report 2009 is not enough to trust." In May 19th, China high-speed media received notice from the nasdaq.

3, because the stock price is long-term under $1 and a market capitalisation reasons was forced to withdraw from the market

Couplet swims from Nasdaq delisting is the typical case. In February 22, 2012, Lian tour officially delisted from Nasdaq, retreat to the pink sheet market, transaction code changes from CCGM to CCGM.PK. Public data shows, couplet swims delisted before the total share capital of 20039200, the total market value of more than 420 dollars.

In 2010 August, Tang Jun will swim shares in Dahua building 60% (CAEI), backdoor listing on the nasdaq. But after the game product "thunder" and "Warring States" has failed to launch, the company without any source of income; managers struggle, layoffs incident has further exacerbated the Volatility: in 2010 July, the long-term stock price below $1 red line received the NASDAQ delisting warning. Before the December 28, 2010 deadline, couplet swims through the 1:4 and shares stock prices above US $1, temporary escape. However subsequently couplet swims stock again fell below 1 U. s.dollars, couplet swims receives NASDAQ delisting warning again in 2012 August, the deadline is February 22, 2012.

Xinhua sports and entertainment, but also because of long-term stock price below $1 by the Nasdaq, after being transferred to the pink sheets market continued trading.

(four) short risk

Since October 2010, many in the United States listed company Chinese concept (referred to as China concept stocks) because of suspected fraud of listed or because of fraud behavior of listed appears, suffer bear raids in America securities market (is short), cut off the price, market value has shrunk sharply, even the requirement to buy, suspended or delisted, this event had a great influence on the company, causes the entire Chinese concept company encounter group the serious crisis of trust.

In the United States Chinese concept stocks suffered a crisis of confidence began in 2010 October, since 2011 March, the situation deteriorated, 24 home in the United States listed China concept auditors resign or exposure of its audit object have financial problems, 19 companies have been suspended or delisted; some do empty institutions took the opportunity to render, amplification Chinese concept company fraud. Increasingly, event. Especially after entering in 2011 June, a crisis of confidence on the small, a reverse takeover of listing Corporation gradually evolved into the concept of trust crisis Chinese group company.

China concept stocks are concentrated and short China enterprises in the United States listed (especially a reverse takeover) in the process of excessive packaging and suspected of financial fraud, however, also with several short Chinese concept stocks helped the Professional Company. Among them, lime and water companies in the short Chinese concept stocks wave with its precise attack won numerous disputes and attention. ^[12]Analysis of lime and water short study found, Chinese concept stocks have some common characteristics of financial fraud has a positive correlation with very strong. These features mainly include: far higher than the industry's gross margin; for industrial and commercial tax department and file and give inconsistent SEC ; from the transaction situation or income rely heavily on related transactions; major shareholders and management layer of the stock transaction suspicious; audit firm unknown and the credibility of the poor; management integrity worth doubt; replacing the auditing firm or CFO; excessive outsourcing, rely on sales agents or income through intermediaries; exceed the company structure of the commercial needs complicated; ultra low price stock.

Chinese concept stocks is short and the trust crisis, caused USA SEC, American judicial department and other departments concerned, and adopted a series of measures aimed at. Some securities brokerage agencies have adjusted to China concept stock trading strategies, USA brokerage based China Company announced in June 8th, because of fears that some possible accounting irregularities, and to prohibit customers to deposit to buy some shares in the China Company has been in when the week. Included in the "blacklist" of the China Company more than 159 stocks in 132 companies, including Mcglaughlin, Sina, Sohu, and other famous enterprises dangdang.com.

By the end of 2010, large-scale survey for a reverse takeover "China concept stocks" to carry out America SEC, SEC suspected that these companies may have lax accounting irregularities and audit in the listing process. SEC Commissioner Luis Aquila (Luis Aguilar) at the beginning of 2011 4 revealed, by special team back to China Company merger and acquisition issues "to take action". USA public corporation accounting oversight board (hereinafter referred to as PCAOB) also position is still in investigation.

In June 14, 2011, American SEC announced, will start to China intelligent lighting and Chinese century dragon media companies in the proceedings, if the irrefutable evidence, two executives will face criminal penalties, and the company may also by investors huge amounts of group litigation claims. Because with audit opinion on the financial statements can not, China century dragon media, Chinese intelligent lighting in March 23rd 2011 received American exchange suspension notice, exchanges have to start the delisting procedure.

In November 9, 2011, America SEC approved the new regulations more strictly regulated through a reverse takeover complete listing behavior in the United states. According to the new regulations, the Nasdaq, NYSE and America exchange will to be accomplished through a reverse takeover listing requirements more stringent in the United States listed company, through a reverse takeover of listed company in the new United States should meet the following conditions: backdoor companies in America OTC market, American national exchange or foreign exchange trading time is not less than one year; the detailed documents must be submitted to the backdoor transaction related information to the SEC to the SEC; the timely submission of audited financial statements at least one accounting year; in the enterprise to apply for listing and trading decisions have at least 30 days stable phase closing price of not less than us $4 of its listed before the 60 trading days; if the backdoor enterprise trading in foreign exchange, the foreign exchange must be a regular exchange; must submit all necessary documents including the audited earnings, to SEC.

In addition, in September 30, 2011, USA SEC enforcement director Robert Khuzami said, American judicial department have begun to Chinese in American listed company accounting fraud and accounting irregularities investigated. He pointed out, there have been a number of distribution across the United States federal prosecutors began investigating this problem, adding American Justice Department will make efforts to study accounting problems Chinese listed companies continue to increase.

(five) the risk of intermediary fraud

China mainland enterprises to American listed, directly in the face of complex and risky international capital market, and the enterprise itself is often not familiar with relevant experience and expertise, plus foreign legal environment has the very big difference with the domestic, overseas listing legal supervision more strictly, approval procedures are not the same. Enterprises need to employ a number of intermediary institutions (including the sponsor, lawyers, accountants and other) work to help the enterprise to achieve the United States listed, the overseas listing of the target. So enterprises in the selection of intermediary, must recognize the true face of intermediary institutions, avoid to touch on some black intermediary, or listed on the road was rough, or even terminate the. Some unscrupulous intermediaries that no matter what the conditions and qualifications of the enterprises have promised to help the listing and financing, until the intermediary costs income bursa is willing to give up. In fact, these intermediary or unable to help corporate finance, or is not able to help enterprises listed. In addition, some conduit company in order to attract customers, expand the momentum, some small securities companies and USA (namely the broker - dealer) alliance, or hire USA some outgoing government officials try every trick to mislead the public. These small securities companies may only have a few full-time employees of the Broker's Firm, neither in Chinese business, may not reverse takeover of listed business experience; moreover also take forcible possession of successful case, others a whoop and a holler, believe in the ability to induce enterprises. And the conduit company to make money even rush into danger, in the knowledge that the illegal cases to help enterprises to resort to deceit, trying to fool the overseas regulators and investors. The consequences were once the truth was revealed, not only companies and intermediaries to lose all standing and reputation, is also likely to face America legal punishment, consequences be unbearable to contemplate.

Xi'an Yangling Bodison biotechnology company in the United States listed early once suffered intermediary fraud. Bodison and USA Voight financial group, the group and its Shanghai representative office in charge of the Bodison sum of "non refundable fee" commitment will help as soon as possible in the American "back door listing". However, 9 months later, the overseas listing things or no progress. After the investigation discovery, sounds the famous "USA Voight financial group" registered in USA Texas, all employees of a company only the boss himself, "headquarters" is his home, is located on a horse farm in suburb of Dallas.

Hainan, the company is also a representative case. In May 31, 2002, we in Beijing Xicheng Court Chinese consulting company. We claim, because the United States back door listing is fraud, and ultimately lose everything, not only did not get listed shell company own vision, also lost $about 300000, and the consulting company as the clip in the domestic consulting unit, full participation in the shell before and after the matters, for the loss, the Consultant shall be liable for breach, liability for fraud, should pay 4367000 yuan. In November 19, 2003, Beijing city is the Xicheng District court verdict, ruling the Chinese consulting company Hainan Kaili compensation related losses amounting to more than 400 yuan. The consulting company may appeal. In December 20, 2004, Beijing City Intermediate People's court commuted the two trial, the consulting company Hainan Kaili compensation two hundred thousand yuan.

Two countermeasures and suggestions, to guard against and dissolve the Chinese companies listed in the US legal risk

(a) the full understanding, familiar with and master the laws and regulations and regulatory USA capital requirements, establish a "fear, fear of legal rules" of the concept of the rule of law and compliance awareness

As mentioned above, American is one of the world's most severe on capital market regulation of the state, in the course of the development of the capital market, has formulated a series of strict laws and rules, and created the securities class action the implementation of America federal securities laws "the most powerful weapon". Therefore, in order to prevent risks effectively, group litigation illegal punishment risk, legal risk, be the first to bear the brunt of the requirements of our country is the United States listed enterprise and its directors, executives should be paid attention to, conscientiously study, understand and grasp the laws and regulations and regulatory USA capital requirements, establish a "fear, fear of legal rules" of the concept of the rule of law and harmony rule consciousness.

In addition, the full understanding, familiar with and master the laws and regulations and regulatory America capital requirements, can also enable Chinese enterprises to avoid the txjc listing process because the rule of law are not familiar with the failure to loss. The most typical case is the opposite of China aero technology import and export companies hope that through the acquisition of Mamco in America backdoor listing and get the key components of the company relating to the production technology in aircraft, military, civil aircraft for domestic production in china. But as a result of the acquisition process, a not fully considered in advance American relevant laws of foreign restrictions and take avoidance measures; in addition, America "Foreign Investment Commission" on the purchase of the survey, also did not make full use of the law to protect the legitimate rights and interests of USA barrier own, LED the committee that the acquisition has endanger the national security of the USA may, and applies the Aikexun -- Buddha Luo Li Ou amendment (Exon - Florio Amendment), forcing the CATIC has been sold to buy the stock, caused huge losses to catic.

(two) strictly fulfill the disclosure of information service, improve the corporate governance structure and internal control system, improve the transparency and standardization of enterprise

1, strictly perform the information disclosure of business, focus on improving the transparency

Information disclosure system is the core system America securities laws, whether it is early 1933 "Securities Law", "Securities Exchange Act of 1934", or the recent "Sarbanes - Oxley act" and the "Dodd Frank act", both in the information disclosure as the core and key regulation. From the foregoing, listing Corporation in the American encounter group litigation risk, the risk of delisting risk, illegal and short risk of China to the United States, one of the most important and the main reason is that the non standardized information disclosure, including the disclosure of information is not timely (not timely disclosure of the annual report, interim report and quarterly reports) and the disclosure of false information (suspected financial fraud). Therefore, China's enterprises in the process of U.S. listed and listed, must attach great importance to information disclosure, to take positive measures to guard against and defuse the risk of information disclosure.

First of all, should be strictly in accordance with the basic system and operating procedures related regulatory American requirements for information disclosure, and improve the company directors, senior management staff should attach great importance to the legal system of disclosure of information, specify the senior managers of the company is responsible for the leadership and organization of the company's annual report, interim report and the quarterly report, disclosure and other information disclosure work, to make information communication between investors, USA SEC, NYSE, NASDAQ and other regulatory bodies, to disclose the information true, accurate, complete, timely, to ensure fair.

Secondly, should strengthen the cooperation with the intermediary agency for overseas professional, hire analysts on enterprise information in to disclose necessary professional lawyers, high credibility of the audit, to ensure the quality of information disclosure of relevant regulatory requirements, to avoid legal disputes.

Once again, should hold regular communication meetings or tour to promote, strengthen information communication with investors, building a Harmonious Investor relations. At the same time, strengthen and underwriters, listing sponsors and securities analyst contact, timely communication, make them become the bridge between the company and investors, the public.

2, improve the corporate governance structure and internal control system, improve the normative

In USA listed China Company should be strictly in accordance with the "Sarbanes Oxley act", "Dodd - Frank act" and America SEC regulation and self-regulation of stock exchange rules, especially in accordance with the "Sarbanes Oxley act" requirements, improve the corporate governance structure and internal control system, improve the normative.

First of all, for any independent directors have the professional knowledge and occupation ethics, establish professional audit committee, remuneration committee, nomination committee, perfect the internal control system and external supervision measures, standardized, programmed way make the decision-making and implementation.

Secondly, to clear the general meeting of shareholders, board of directors, board of supervisors, managers of the power, responsibility and interests, establish effective incentive and restraint mechanisms, improve the occupation moral training of employees, strengthen the punishment for the accident responsibility and financial fraud.

Once again, should set up internal control committee, responsible for the construction of the internal control system of enterprises, from the control environment, risk assessment, management, information communication, process supervision and perfecting the. Regular internal control self assessment, the evaluation results of quantitative, timely find and solve the problems in the internal control system.

(three) positive coping securities group litigation, maximize defuse the risk group litigation

In the capital market environment and America legal system background, high frequency group litigation, listing Corporation in the United States is difficult to completely avoid china. To this end, we propose the following suggestions:

First of all, Chinese enterprises should fully understand, familiar with American group litigation system of rules, procedures, should actively proof and litigation by group action, instead of negative omission, to win or to reduce the amount of compensation. ^[13]

Secondly, should choose can USA laws, and understand the legal adviser, China enterprise needs strong and experienced financial consultant as partners to jointly deal with the group litigation.

Once again, should make full use of mediation means to cope with group action. Once the company in American securities group lawsuit case, huge potential liability, the amount of compensation may reach hundreds of millions of dollars in punitive damages, rules of court and can use three times, is a devastating blow to the most China United States listing Corporation. Therefore, once encounter group litigation situation, after experienced lawyers after the full study, select the reconciliation is a relatively safe choice, more conducive to the future development of the company.

(four) take the initiative in response to counter measures, try to resolve the short risk

Since October 2010, on suspicion of financial fraud, part Chinese concept stocks suffered short mechanism in the United States "hunting". It is understood, is America short seller, Moodie make a bad rating China concept stocks up to more than 140, the figure is still rising. When silence is select the most numerous Chinese concept stocks suffered "hunting", which led to the stock price falls, be forced to withdraw from the market and many other negative effects. Also, New Oriental Spreadtrum individual China concept chose to take the initiative to fight back, successfully resolved the short risk.

The first to respond and success is in short of Spreadtrum communications, NASDAQ listed. In June 28, 2011, the company released the muddy water to Spreadtrum's question to report, and in an open letter to President Li Liyou in Spreadtrum communications to explain a series of financing, internal executive turnover, audit institutions and the growth of the replacement market. The move led to Spreadtrum shares fell 33.7%. In this regard, Spreadtrum communications day issued a continuous response, and held a global investor conference call on the second day, on the one one question answer, muddy water company that the report was "not true", "lack of evidence". Spreadtrum communications so successfully coped with from the muddy water company selling, stock xianyihouyang, not only has to win back investor confidence, while the America market recognition in larger range.

In November 17, 2011, America survey lime report questioned the New Oriental, that New Oriental in Merged Companies's financial performance, not inter company transactions excluded, resulting in New Oriental School from 2007 to 2010 revenue exaggerated beauty yuan nearly 167000000, net profit of $137000000 was exaggerated. New Oriental chairman Yu Minhong immediately reaction said: "the question to report no value. All financial information is the four largest independent accounting firms audit, real financial data "in line with the USA GAAP standard, because the response time and counterattack, lime, shorting the frustration of purpose, New Oriental shares after lime short did not fall but rise more than 100%.

Therefore, China listing Corporation in the United States in the future in the face of muddy water and other intermediary agencies to sell short, first of all to establish the integrity of the enterprise concept and standard operation consciousness, to read, to find the cause from your own, to see if there are problems related to agency pointed out. If that does not have these problems, should learn from successful practices Spreadtrum communications, New Oriental company, not the "lamb to be slaughtered", take the response and counter measures actively, try to resolve the short risk.

In addition, in recent years Chinese concept overseas collective experience "encirclement and suppression", because the stock price fell that overseas listed companies value has been underestimated, return intention of growing. "PPP" strategy (Public – Private – Public, listed - delisting - listed) may be one way to Chinese concept stocks in the future selection. In view of Chinese concept stocks many "little red", therefore, suggests that China's regulators to establish and perfect the "small red chip return mechanism" within the SME board, the gem.

(five) the strict screening hire intermediary institutions, to ensure that the risks intermediary fraud

To minimize the risk of intermediary fraud for the effective prevention of strict screening, the enterprises should hire intermediary institutions in the United States listed in the preparation process, cooperation and management strength, high degree of credibility, a successful case American qualified formal intermediary institutions. In the intermediary institutions under the guidance of selecting suitable financing mode, financing places, determine the fair price, combined with the macro economic situation and market analysis of the host country, select the appropriate time to market, the smooth realization of listed in America capital market.

(six) to further strengthen bilateral cooperation between China and the United States securities regulation, effectively curb the illegal acts of beauty Chinese listing Corporation

In recent years, China and the United States a series of very fruitful exploration in the areas of bilateral cooperation in securities regulation. In April 28, 1994, China CSRC and USA SEC signed a "memorandum of understanding on the stock cooperation, consultation and technical assistance.". July 11, 2011 to 12, for the implementation of the third China US strategic and economic dialogue outcome, China Commission, Ministry of Finance and the American public corporation accounting oversight board, USA SEC in Beijing on cross-border auditing supervision and cooperation of the two days of discussions, discussion, both sides are respectively introduced the related system and the procedure of their audit supervision, and exchanged views on how to strengthen the audit supervision of cross-border cooperation seminar was held successfully, that the two sides in public corporation audit supervision cooperation is an important step. Therefore, suggestions on the basis of previous work, the spirit of "equality, mutual benefit" principle, to further strengthen bilateral cooperation in securities regulation of China and the United States, effectively curb China listing Corporation in the United States of illegal behavior, prevent and resolve the legal risk in the Chinese listing Corporation.