Fuqi International Inc. settled a lawsuit by the U.S. Securities and Exchange Commission over $134 million in cash transfers made by the company’s chairman, Yu Kwai Chong.
Fuqi International, in a filing today in federal court in Washington, agreed to pay $1 million to resolve allegations that the company and Chong violated U.S. securities laws by making about 50 cash transfers in 2009 and 2010 to three unidentified entities. Fuqi, based in Shenzhen, China, neither admitted or denied the SEC allegations.
“For a significant portion of the funds transferred in an out of the company, Chong and Fuqi have been unable to provide reliable third-party verification for the information found in Fuqi’s internal records or representations made by Chong,” Ansu Banerjee, an SEC lawyer, said in the complaint.
Chong agreed to pay $150,000 without admitting or denying accusations that he made the cash transfers without approval from the board or the required documentation.
Fuqi International’s common stock was traded on the Nasdaq Stock Market until it was delisted on March 29, 2011.
Fuqi International’s lawyer, Deborah Meshulam of DLA Piper in Washington, and Thomas Wardell, a lawyer for Chong at McKenna, Long & Aldridge LLP in Atlanta, didn’t immediately respond to phone messages seeking comment on the settlement.
John Nester, an SEC spokesman, didn’t immediately respond to an e-mail message seeking comment on the case.
The case is U.S. Securities and Exchange Commission v. Fuqi International Inc., 13-cv-00995, U.S. District Court, District of Columbia (Washington).