Reverse Merger Chinese-based Companies to Caution

June 24, 2011

There have been quite a few Chinese frauds exposed in the past 6 months – many of these were listed on U.S. markets via reverse mergers. Essentially this is an old shell of a listing that an existing company can move into – sort of like when crab sheds its old shell and moves into better digs. Many of these companies have been exposed by a handful of firms who specialize in shorting (i.e. the Muddy Waters types).

Bloomberg has a list of all Chinese reverse mergers so one can assume someone at these handful of firms is looking into each and every one. I am sure some babies will get thrown out with the bathwater but I would not go near these with your 10 foot pole, since waking up one morning to a -80% return is not my cup of tea. In full disclosure I’ve spoken (and been bullish) on a few of these over the past 3-4 years. The extent of fraud from the Chinese has been a bit stunning to me – I guess being like Enron is cool.

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The following companies are based in China and gained listings on U.S. exchanges after conducting reverse mergers, in which a publicly traded shell corporation is purchased, according to data compiled by NYSE Euronext (NYSE:NYX). Stocks that have been delisted from the Nasdaq Stock Market (NASDAQ:NDAQ), NYSE Amex or New York Stock Exchange have been omitted.

The Securities and Exchange Commission cautioned investors on June 9 about buying stakes in Chinese-based companies when they gain listings through reverse mergers, avoiding the regulatory and investor scrutiny of initial public offerings.

NAME                                      TICKER       EXCHANGE
AgFeed Industries                         (NASDAQ:FEED) US      Nasdaq
American Lorain                            (AMEX:ALN) US      NYSE Amex
Aoxing Pharmaceutical                      (AMEX:AXN) US      NYSE Amex
A-Power Energy Generation Systems         (NASDAQ:APWR) US      Nasdaq
AutoChina International                   (NASDAQ:AUTC) US      Nasdaq
Biostar Pharmaceuticals                   (NASDAQ:BSPM) US      Nasdaq
China Armco Metals                        (AMEX:CNAM) US      NYSE Amex
China Auto Logistics                      (NASDAQ:CALI) US      Nasdaq
China Automotive Systems                  (NASDAQ:CAAS) US      Nasdaq
China BAK Battery                         (NASDAQ:CBAK) US      Nasdaq
China Biologic Products                   (NASDAQ:CBPO) US      Nasdaq
China Botanic Pharmaceutical               (AMEX:CBP) US      NYSE Amex
China Cablecom Holdings                   (NASDAQ:CABL) US      Nasdaq
China Ceramics                            (NASDAQ:CCCL) US      Nasdaq
China CGame                               (NASDAQ:CCGM) US      Nasdaq
China Finance Online                      (NASDAQ:JRJC) US      Nasdaq
China Fire & Security Group               (NASDAQ:CFSG) US      Nasdaq
China GengSheng Minerals                  (AMEX:CHGS) US      NYSE Amex
China Gerui Advanced Materials Group      (NASDAQ:CHOP) US      Nasdaq
China HGS Real Estate                     (NASDAQ:HGSH) US      Nasdaq
China Housing & Land Development          (NASDAQ:CHLN) US      Nasdaq
China Information Technology              (NASDAQ:CNIT) US      Nasdaq
China Infrastructure Investment           (NASDAQ:CIIC) US      Nasdaq
China Jo-Jo Drugstores                    (NASDAQ:CJJD) US      Nasdaq
China Marine Food Group                   (AMEX:CMFO) US      NYSE Amex
China Natural Gas                         (NASDAQ:CHNG) US      Nasdaq
China North East Petroleum Holdings        (AMEX:NEP) US      NYSE Amex
China Nutrifruit Group                    (AMEX:CNGL) US      NYSE Amex
China Pharma Holdings                     (AMEX:CPHI) US      NYSE Amex
China Recycling Energy                    (NASDAQ:CREG) US      Nasdaq
China Ritar Power                         (NASDAQ:CRTP) US      Nasdaq
China Shen Zhou Mining & Resources         (AMEX:SHZ) US      NYSE Amex
China Shengda Packaging Group             (NASDAQ:CPGI) US      Nasdaq
China Shenghuo Pharmaceutical Holdings     (AMEX:KUN) US      NYSE Amex
China Sky One Medical                     (NASDAQ:CSKI) US      Nasdaq
China TransInfo Technology                (NASDAQ:CTFO) US      Nasdaq
China Valves Technology                   (NASDAQ:CVVT) US      Nasdaq
China XD Plastics                         (NASDAQ:CXDC) US      Nasdaq
China Yida Holdings                       (NASDAQ:CNYD) US      Nasdaq
China-Biotics                             (NASDAQ:CHBT) US      Nasdaq
ChinaCast Education                       (NASDAQ:CAST) US      Nasdaq
ChinaNet Online Holdings                  (NASDAQ:CNET) US      Nasdaq
Cleantech Solutions International         (NASDAQ:CLNT) US      Nasdaq
Cogo Group                                (NASDAQ:COGO) US      Nasdaq
Deer Consumer Products                    (NASDAQ:DEER) US      Nasdaq
Dehaier Medical Systems                   (NASDAQ:DHRM) US      Nasdaq
Ever-Glory International Group             (AMEX:EVK) US      NYSE Amex
Feihe International                        (NYSE:ADY) US      NYSE
Fuwei Films Holdings                      (NASDAQ:FFHL) US      Nasdaq
General Steel Holdings                     (NYSE:GSI) US      NYSE
Guanwei Recycling                         (NASDAQ:GPRC) US      Nasdaq
Gulf Resources                            (NASDAQ:GFRE) US      Nasdaq
Harbin Electric                           (NASDAQ:HRBN) US      Nasdaq
Highpower International                    (NASDAQ:HPJ) US      Nasdaq
Hollysys Automation Technologies          (NASDAQ:HOLI) US      Nasdaq
Jiangbo Pharmaceuticals                   (NASDAQ:JGBO) US      Nasdaq
Jingwei International                     (NASDAQ:JNGW) US      Nasdaq
Jinpan International                       (NASDAQ:JST) US      Nasdaq
Kandi Technologies                        (NASDAQ:KNDI) US      Nasdaq
Keyuan Petrochemicals                     (NASDAQ:KEYP) US      Nasdaq
Kingold Jewelry                           (NASDAQ:KGJI) US      Nasdaq
Longwei Petroleum Investment Holding       (AMEX:LPH) US      NYSE Amex
New Energy Systems Group                  (AMEX:NEWN) US      NYSE Amex
NF Energy Saving                          (NASDAQ:NFEC) US      Nasdaq
NIVS IntelliMedia Technology Group         (AMEX:NIV) US      NYSE Amex
Orient Paper                               (AMEX:ONP) US      NYSE Amex
Origin Agritech                           (NASDAQ:SEED) US      Nasdaq
Orsus Xelent Technologies                  (AMEX:ORS) US      NYSE Amex
Puda Coal                                 (AMEX:PUDA) US      NYSE Amex
QKL Stores                                (NASDAQ:QKLS) US      Nasdaq
Shengkai Innovations                      (NASDAQ:VALV) US      Nasdaq
Shiner International                      (NASDAQ:BEST) US      Nasdaq
Sinohub                                   (AMEX:SIHI) US      NYSE Amex
Sinovac Biotech                            (NASDAQ:SVA) US      Nasdaq
SkyPeople Fruit Juice                      (NASDAQ:SPU) US      Nasdaq
Skystar Bio-Pharmaceutical                (NASDAQ:SKBI) US      Nasdaq
SmartHeat                                 (NASDAQ:HEAT) US      Nasdaq
SORL Auto Parts                           (NASDAQ:SORL) US      Nasdaq
Sutor Technology Group                    (NASDAQ:SUTR) US      Nasdaq
Telestone Technologies                    (NASDAQ:TSTC) US      Nasdaq
THT Heat Transfer Technology              (NASDAQ:THTI) US      Nasdaq
Tianli Agritech                           (NASDAQ:OINK) US      Nasdaq
Tianyin Pharmaceutical                     (AMEX:TPI) US      NYSE Amex
Tiens Biotech Group                        (AMEX:TBV) US      NYSE Amex
Winner Medical Group                      (NASDAQ:WWIN) US      Nasdaq
Wonder Auto Technology                    (NASDAQ:WATG) US      Nasdaq
Wuhan General Group China                 (NASDAQ:WUHN) US      Nasdaq
Yongye International                      (NASDAQ:YONG) US      Nasdaq
Yucheng Technologies                      (NASDAQ:YTEC) US      Nasdaq
Yuhe International                        (NASDAQ:YUII) US      Nasdaq
Zhongpin                                  (NASDAQ:HOGS) US      Nasdaq
Zoom Technologies                         (NASDAQ:ZOOM) US      Nasdaq