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FUQI to Trade on Pink Sheets

Investigation Finds Cash Transfers
Mar 29, 2011 1:46 PM   By Jeff Miller
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RAPAPORT... The NASDAQ Listing Qualifications Panel notified FUQI International Inc. that it would be delisted on March 29.   FUQI issued a statement saying that it was eligible for  Over-The-Counter (OTC) trading on Pink Sheets under the symbol "FUQI.PK," which was active at press time.

As reported by Rapaport on March 18, FUQI had again sought an extension with the NASDAQ  to file its amended results for 2009 and full results for 2010. Yesterday, the company stated that an internal investigation uncovered cash transfers.

According to a FUQI filing, preliminary findings of an audit committee investigation found that cash transfers commenced in September 2009 and ended in November 2010.  "Based on review of bank statements obtained from the company, all of the outgoing cash transfers made by the company were repaid in full by the recipient companies on a short-term basis, with no loss resulting from the transfers," the filing stated.  

Transfers were made from non-interest bearing accounts and for the 2009 and 2010 fiscal years that both ended on December 31, the aggregate amount of the cash transfers totaled approximately $86.3 million and $47.5 million, respectively. The highest amount outstanding on any given date was  approximately $24.1 million in 2009 and $8.5 million in 2010, according to the SEC filing.

FUQI stated that  transfers were made at the request of its primary lender, were authorized by company chairman Yu Kwai Chong and approved by its deputy finance director.  Chong reportedly agreed to a request from "a bank representative to conduct the transfers for the purpose of strengthening the company's relationship with the bank."

The bank accounts that received the cash transfers were designated by the bank and three companies associated with those accounts are registered legal entities in China, but FUQI  has not been able to confirm the accuracy of their business addresses nor determine the extent and nature of their business operations, if any, according to the jewelry manufacturer.  "The company has not conducted any commercial business with those entities aside from the short-term cash transfer transactions," it stated.



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Tags: bank, cash, delisting, fuqi, Jeff Miller, nasdaq, pink sheets, transfere
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