US Capital Pennsylvania Avenue After the Snow Washington DCANNOUNCEMENT

On December 3, 2013, former Congressman Don Bonker of APCO and I will be speaking in Vancouver, Canada at a breakfast conference held by the American Chamber of Commerce on “The Trans-Pacific Partnership Demystified: A Discussion of Trade Opportunities for American and Canadian  Businesses”.

Attached is a copy of the Speech announcement.  AMCHAM – Dec 3 TPP Event – INVITE (2)  Hope to see some of you in Vancouver, Canada. 

There have been some major developments in the trade, False Claims Act, Customs fraud, patents, antitrust, Chinese antitrust and securities areas.

The big news is that after two and a half weeks, on October 17, 2013, the US Government reopened. As a result of the shutdown, in most trade cases, the Commerce Department and the US International Trade Commission (“ITC”) have tolled, pushed up, all deadlines in trade investigations and review investigations, by the number of days that the Government was shutdown.  Attached are  a Commerce Department and an ITC memo announcing their decisions to toll all deadlines in antidumping and countervailing duty and other trade cases by 16 days, which are the days the US government was shut down.  COMMERCE TOLLING MEMO  ITC TOLLING DEADLINES

TRADE

SOLAR CELLS—SETTLEMENT AND THIRD COUNTRY CELLS LOOPHOLE

Apparently, negotiations between the US and China in the Solar Cells case have slowed down because of the US government shutdown. Meanwhile, the U.S. Department of Commerce is continuing to press Chinese exporters of solar panels to demonstrate that their products fall outside of existing antidumping (AD) and countervailing duty (CVD) orders by proving that they contain  solar cells in Chinese panels and modules that are produced in third countries.

The Commerce Department has not launched a formal circumvention inquiry, but it has issued 3 to 4 questionnaires, and Chinese solar companies, Wuxi Suntech, Renesola, Yingli, LDK and Trina have responded.  Commerce has requested extensive documentation from the Chinese companies to prove not only that the solar cells are sourced from outside of China, but actually to trace those cells through their foreign production to insertion into Chinese modules and panels and then exported to the United States.  Not only is Commerce requesting the documents, we also have reports that Customs is requiring similar documents to prove that the solar cells were actually produced outside of China.

Although Chinese companies and US importers are not happy with the volume of documents requested by Commerce, in its final determination in the initial investigation, Commerce indicated that it would require importers to certify and then prove that the imported solar cells are actually produced outside of China.  Commerce has gone so far as to request that Chinese firms submit computer screenshots – or image captures of their computer  monitor – showing how they track sales and receipts of their inventory through their accounting system. Commerce  officials routinely print out screenshots from companies’ systems when they conduct on-site verifications of their claims during investigations.

Solar cells produced in countries like Taiwan and Malaysia fall outside the scope of the trade remedy orders imposed  by Commerce, even if they are assembled into panels and shipped by companies in China. Many Chinese companies  – even those that manufacture cells – have thus begun incorporating cells made in third countries in order to make sure those products shipped to the U.S. are not affected.

See also antitrust section below describing the recent antitrust complaint filed against Chinese solar companies.

CHINESE EXPORT TARIFS ON RARE EARTH METALS AND OTHER PRODUCTS

On October 10, 2013, Stewart & Stewart, a well-known law firm for US petitioners/domestic producers and US unions in antidumping and countervailing duty cases, released the attached report complaining about the Chinese government’s failure to lift export taxes on exports of raw materials, including rare earth metals.  CHINESE EXPORT TARIFFS ON RARE EARTH METALS AND OTHER RAW MATERIAL PRODUCTS

The Stewart firm argues that these export tariffs on tungsten, various metal products and wood and pulp products have been put in place to give Chinese producers an unfair advantage because they get access to cheaper raw materials.

What the Stewart firm does not mention is the fact that many of these export tariffs have been put in place by the Chinese government to deter US antidumping cases, including antidumping cases against Tungsten Ore and Silicon Carbide, antidumping orders on Magnesium, all Magnesium Products and Silicomanganese, and the new antidumping and countervailing duty orders against hardwood plywood.  All magnesium, magnesium products, including manganese metal and magnesium bricks, and silicomanganese, have been shut out of the US market not by Chinese export taxes, but by US antidumping orders.

In early 2000s, the US Magnesium Die Casting industry warned the US International Trade Commission at the Sunset Review on Magnesium that if they left the antidumping order on Magnesium from China in place, the US industry would contract. According to one magnesium die castor, in 2002, there were 16 US die cast producers in the US industry. There are now 4 producers left with the loss of 11,000 US production jobs.

What Stewart is proposing that China must dance to the US tune. But with the impact of these US antidumping and countervailing duty orders on US producers of downstream products, these antidumping and counterduty orders are truly cutting off US producers’ nose to spite their face.

NEW ANTIDUMPING AND COUNTERVAILING DUTY INVESTIGATIONS

NON-ORIENTED ELECTRICAL STEEL

On September 30, 2013, AK Steel Corporation filed antidumping and countervailing duty petitions against non-oriented electrical steel. See notice below.
Docket No: 2985
Document Type: 701 & 731 Petition
Filed By: Joseph W. Dorn
Firm/Org: King and Spalding
Behalf Of: AK Steel Corporation
Date Received: September 30, 2013
Commodity: Non-Oriented Electrical Steel
Countries: China, Germany, Japan, Korea, Sweden, and Taiwan
Description: Letter to Lisa R. Barton, Secretary, USITC; requesting the Commission to conduct an investigation under sections 701 and 731 of the Tariff Act of 1930 regarding the imposition of antidumping and countervailing duties on imports of Non-Oriented Electrical Steel from the People’s Republic of China, The Federal Republic of Germany, Japan, The Republic of Korea, the Kingdom of Sweden, and the People’s Republic of China (Taiwan).

The Chinese producers are: Angang Group International Trade Corp, Anshan Iron & Steel Group Corporation, Anyang Iron & Steel Group Co. Ltd. (AISCO), Baosteel Group Corporation and Baoshan Iron & Steel Company, Ltd., Baotou Iron & Steel (Group) Co., Ltd., Chongqing Iron & Steel (Group) Co., Ltd., Jiangsu Shagang Group, Jianlong Group, Fujian Xinjiu Technology Group, Foshan Jinxi Jinlan Cold Rolled Steel Sheets Co., Ltd., Jiangsu Jijing Metal Technology Co., Ltd. , Maanshan Iron & Steel Co., Ltd., Shougang Qian’an Iron & Steel Co., Ltd., Shunde POSCO Coated Steel (SHUNPO), Tianjin Jiyu Steel Co., Ltd., Taiyuan Iron & Steel (Group) Co., Ltd., Tianjin Huangtai New Energy-Saving Electromechanical Materials Co., Ltd., WISDRI (Xinyu) Cold Processing Engineering Co., Ltd., Wuhan Iron and Steel Group, Inc. (WISCO), Wuhan Iron & Steel Co., Ltd., Xinwanxin (Fujian) Fine Thin Board Co., Ltd., Xinyu Iron & Steel Co., Ltd.,  and Zhejiang Xiehe Group.

TETRAFLUOROETHANE

On October 22, 2013, Mexichem Fluor, Inc. filed an antidumping and countervailing duty petition was filed against 1, 1, 1, 2-tetrafluoroethane from China.  The Chinese respondent companies are: Bluestar, Kangtai, Dongyue, Sinochem Taicang, Juhua, Bailian, Goldsnow, and Sanmei.  Attached is a copy of the ITC initiation notice.  ITC NOTICE TETRA

IMPORT ALLIANCE FOR AMERICA/IMPORTERS’ LOBBYING COALITION

As mentioned in prior newsletters, we are working with APCO, a well-known lobbying/government relations firm in Washington DC, on establishing a US importers/end users lobbying coalition to lobby against the expansion of the antidumping and countervailing duty laws against China.

On September 18, 2013, ten US Importers agreed to form the Import Alliance for America. The objective of the Coalition will be to educate the US Congress and Administration on the damaging effects of the US China trade war, especially US antidumping and countervailing duty laws, on US importers and US downstream industries.

We will be targeting two major issues—Working for market economy treatment for China in 2016 and working against retroactive liability for US importers. The key point of our arguments is that these changes in the US antidumping and countervailing duty laws are to help US companies, especially US importers and downstream industries. We will also be advocating for a public interest test in antidumping and countervailing duty cases and standing for US end user companies.

If anyone is interested in the Alliance, please feel free to contact me.

APCO CHINA BRAND ARTICLE

Attached is an article published by in the Harvard Business Review by APCO China on the issues faced by Chinese companies in branding their products worldwide.  APCO BRANDS ARTICLE

DORSEY LAWYER ON SHANGHAI FREE TRADE ZONE

For an interview video on You Tube with Peter Corne, the head of Dorsey’s Shanghai office, on the new Shanghai Free Trade Zone, see http://www.youtube.com/watch?v=-K-BoK8y2Po.

CHINESE ANTIDUMPING AND COUNTERVAILING DUTY LAW

MOFCOM SPEECH ON ANTIDUMPING AND COUNTERVAILING DUTY LAW

To understand the Chinese government’s position on the application of the US antidumping and countervailing duty law from their point of view, on October 7, 2013, following the APEC meeting in Bali, Mr. Jianhua Yu, Deputy China International Trade Representative, explained that China is by far the major target of more antidumping and countervailing duty cases than any other country worldwide, stating:

“China is in a serious trade friction situation. According to the statistics, China has got the most anti-dumping investigations among all the WTO members in 18 consecutive years and got the most anti-dumping surveies (sic) among all the countries in the world in 7 consecutive years. Chinese government will, as always, unswervingly fight against trade and investment protectionism. We advocate that all the members work together to resist trade protectionism, stay cautious and restrained, regulate the use of trade remedy measures; help and concern about each other and try to settle the trade dispute by dialogues. President Xi Jinping stressed, in recent G20 Summit, that only when you open the window to realize air convection, can fresh air come in. Trade protectionism and abuse use of trade remedy measures can only do harm to others “without serving their own interest”. Therefore, we hope to deepen the communication with governments of other economies under APEC, strenghten trade and industrial policy coordination, solve trade friction through negotiations, step up dialogues and cooperation, mutually fight against protectionism of any form and resolutely preserve and develop an opening world economy.”

CUSTOMS FRAUD

FALSE CLAIMS ACT

A major False Claims Act case for triple damages has been filed against Aluminum Extrusions companies in Hong Kong, China and the US.  See the attached complaint. ALUMINUM FCA COMPLAINT TAISHAN GOLDEN GATE AND INNOVATIVE  Some of the respondent companies are Tai Shan Golden Gain Aluminum Products, Ltd. and Innovative Aluminum in Hong Kong.  Additional respondent companies are listed below.   John Doe companies are companies that are involved in the conspiracy, but not known to the Government or the relator that filed the action.

In the Complaint, relator alleged that the respondent companies were transshipping aluminum extrusions through Malaysia and labeling the aluminum extrusions as produced in Malaysia to avoid antidumping and countervailing duties on aluminum extrusions from China.  This is Customs fraud and can result in civil and criminal penalties under the US Customs law and triple damages under the False Claims Act.

False Claims Act cases are filed by a private relator on behalf of the US government.  The relator can be a US or foreign company or a US or foreign individual, such as a person in the US, Hong Kong or China.  In this case, a US individual filed the action.  Once the complaint is filed, the US government has to decide whether to intervene or not.  In this case, the US government has chosen to intervene.

The remedy is triple damages plus attorney’s fees.  The relator is entitled to 15 to 25% of any recovery by the Federal Government.

The complaint was filed in April 2011.  The case did not become public until now because when an FCA complaint is filed, it is filed under seal, in secret, until the US government has a chance to investigate and decide whether to intervene in the case or not.  In this case, after an investigation, the US government has decided to intervene and take over the litigation.

To understand the extent of the damages, take the 374% countervailing duty rate rate in the Aluminum Extrusions case, which is the entered import value of the aluminum extrusions multiplied by 374%.  Then multiply that result by 3 so the potential damages are over 900% of the entered value.  The damages alleged in the complaint, therefore, are many 10s of millions of dollars in liability and potentially millions of dollars in payout to the relator.

False Claims Act cases can also change and become Criminal Customs cases.

The Target Companies in the False Claims Act case are: Tai Shan Golden Gain Aluminum  Products, Ltd, Sam Lei, John Lei, , Innovative Aluminum (Hong Kong), Ltd, Robert Wingfield, Steven Atkinson, Northeastern Aluminum Corporation, William Ma, Master Attraction Sbn Bhd, LMM Marketing Sbn Bhd, King River, TMI, Southeastern Aluminum Products, Inc., Basco Manufacturing Company, Waterfall Group, LLC, C.R. Laurence Company, Inc., Vitro Architectural Products, Southern Aluminum Manufacturing Company, Cardinal Shower Enclosures, Coral Industries, and John Doe Companies

US DOWNSTREAM COMPANIES THAT ARE NOT IMPORTERS OF RECORD ARE NO LONGER SAFE

Many US companies believe that if they are not the US importer of record, they cannot be held liable for Customs problems. That is simply no longer the case.

Attached is an Article about the Honey Antidumping Customs Fraud investigation, by Mike Coursey.   MIKE COURSEY HONEY GATE II ARTICLE  Mike Coursey represents the US Honey, Mushrooms and Garlic industries.

The Article starts this way:

“Still buying imports of dubious foreign origin from unrelated U.S. importers? Consider the case of Groeb Farms, Inc., which recently accepted criminal responsibility for fraudulently entered Chinese honey that had avoided $79 million in duties – despite not being directly involved in the honey’s importation.

The takeaway: Not being the importer of record for fraudulently entered goods does not insulate a “knowing” downstream buyer from criminal liability for that fraud.”

By the way, Groeb Farms has filed for bankruptcy and the two brothers that ran the company are facing possible prison terms.

The point is that downstream companies, such as consignees, that to try to avoid liability by not being importer of record so as circumvent US antidumping and countervailing duty laws with false documents submitted to Customs should be very, very careful. This is not a game; it is a crime. Such actions are not a good business strategy and expose the owners and employees of the downstream companies to criminal fraud cases and millions of dollars in liability.  Import games have consequences.

NEW PATENT CASES AGAINST CHINESE COMPANIES, INCLUDING HUAWEI, ZTE, AND OTHER COMPANIES

On October 7, 2013, Polygroup Macau Limited filed a patent case for infringing Christmas Tree Lights against Willis Electric Co., Ltd., a Taiwan company.  CHRISTMAS LIGHTS PATENT CASE

On October 8, 2013, Blue Spike filed a patent case against Oppo Digital, Inc. and Guangdong Oppo Electronics Industry Co., Ltd. OPPO DIGITIAL GUANGDONG

On October 10, 2013, Pragmatus Mobile filed a patent case against ZTE. PRAGMATUS ZTE

On October 11, 2013, RCRV, Inc. d/b/a Rock Revival filed a trademark case against Guangzhou Nandadi Textile Garment Co. Ltd. GUANGDONG TRADEMARK

On October 14, 2013, Blue Spike filed a patent case against Beijing Xiaomi Technology Co., Ltd. BLUE SPIKE BEIJING COMPLAINT

On October 18, 2013, Alex is the Best filed a patent case aganst ZTE.  ZTE PATENT COMPLAINT

ANTITRUST

SOLAR ANTITRUST CASE

On October 4, 2013, a new class action $950 million antitrust case was filed by Energy Conversion Devices (“ECD”), a former US solar panel producer, which is now bankrupt, against three Chinese companies, Trina, Yingli and Suntech.  ECD argues that the three companies conspired to dominate the American solar market by coordinating a “complex”  price-fixing scheme to sell “inferior” solar panels in the U.S. at artificially low prices and achieve market domination.  According to the attached complaint, SOLAR ANTITRUST CASE the scheme forced ECD into bankruptcy.

The complaint alleges that the companies were able to do this by collaborating with raw material suppliers, lenders, Chinese trade associations and Chinese government entities to dump their solar panels in the U.S. at prices that were less  than the actual cost of materials, assembly and shipping.

The problem with this allegation is that no one knows whether the three Chinese companies were dumping or not. The Commerce Department’s antidumping determination did not determine that the Chinese companies were selling their solar panels below their raw material costs because the Commerce Department refuses to look at actual prices and costs in China to determine dumping. In fact, the real issue in Solar Panels US antidumping case was whether to use Thailand or India as the surrogate country to get the surrogate values to value Chinese consumption factors for raw materials.

What do prices and costs in Thailand or India have to do with the price of solar cells in China? Nothing!! That is the fiction embodied in the Commerce Department’s antidumping determination and now reflected in the antitrust complaint filed by ECD.

VITAMIN C CASE

The Vitamin C case is wrapping up at the District Court level.  Attached is the October 16, 2013 proposed settlement agreement with China Pharmaceutical Group Ltd. and Weisheng Pharmaceutical Group Co., Ltd.  VITAMIN C DIRECT LEGAL FEES  Note that the legal fees for the US lawyers are 7.8 million plus 1.5 million in expenses.

In other words, the Chinese respondent companies pay the legal fees of the US lawyers bringing the case.  Another incentive to bring more antitrust cases in the US against Chinese companies–big payouts to the US lawyers.

LCDS CASE—AU OPTRONICS EXECUTIVE BAI NOT GUILTY

In the second week in October, a Jury in San Francisco found AU Optronics Executive Richard Bai not guilty. In March 2012, a California jury found two executives for AU Optronics guilty, but in the Bai case, the Jury believed that the Justice Department had not provided sufficient evidence of guilt.

AU Optronics has appealed its criminal conviction to the San Francisco-based 9th U.S. Circuit Court of Appeals.  The Taiwan company is arguing that the U.S. Sherman Act can not be stretched to criminalize the actions of foreign companies on foreign soil. In the alternative, the defendants argue that if U.S. antitrust law does have extraterritorial reach, it should be applied in a limited way. AU Optronics argues that the fact that foreign executives met to discuss prices shouldn’t be an automatic U.S. antitrust violation.

Most comentators, however, believe that the chances of winning on this argument are very low.

In response, the Justice Department argues that U.S. antitrust law reaches foreign conduct that has a substantial and intended effect on the U.S..  Justice also also argues that part of the price-fixing conspiracy actually occurred in the U.S, stating LCD makers “reaped billions of dollars in ill-gotten gains at the expense of their U.S. customers,” . . . “That conspiracy meetings were held abroad does not change the felonious nature of defendants’ conspiracy or undo the enormous harm it caused in the United States.”

JAPANESE AUTO PARTS ANTITRUST CASES

On October 3rd and 9th more class action antitrust cases were filed against Japanese auto parts suppliers.  CLASS ACTION ANTITRUST JAPAN 2-13cv14289 CLASS ACTION ANTITRUST JAPAN

CHINA ANTITRUST CASES

As stated before, what goes around, comes around, and we now have Chinese antitrust cases against US companies.

In the attached article NRDC Steps up Anti-trust Enforcement in China Even Further by Peter Corne, head of Dorsey’s Shanghai office, and Blake Yang state:

“On June 27, Biostime, a premium manufacturer of pediatric nutrition and baby care products in China, announced through its Hong Kong holding company that subsidiary Biostime, Inc. (Guangzhou) . . . is subject to investigation by China’s National Development and Reform Commission (“NDRC”).

The main purpose of the investigation is in relation to an alleged violation of Article 14 of the Anti-Monopoly Law of the People’s Republic of China (“AML”) by Biostime, Inc. (Guangzhou) in managing the market sales prices at which the distributors and retailers sell Biostime products. This announcement caused the stock price of Biostime to fall by 7.55% to HKD 43.5 on June 28.

On July 2, it was also reported by National Business Daily, Beijing Times, and other news media that five foreign infant milk firms including Abbott Laboratories, Mead Johnson Nutrition Co., Nestlé SA, Wyeth Nutrition, and Dumex (a brand of Danone) had also been placed under investigation by the NDRC for alleged antitrust violations in relation to Article 14 of the AML.

By way of background, Article 14 of the Anti-Monopoly Law prohibits business operators from entering into vertical agreements with trading partners that fix the product prices or set minimum sales prices for resale to third parties. A violation of Article 14 may attract heavy penalties including a fine ranging from 1% to 10% of the business operator’s overall sales revenue for the preceding year. . . .

This case is significant because it underlines the more aggressive approach that the NDRC has begun to take to anti-trust law enforcement in respect of matters within its own jurisdiction (in the area of pricing). . . .

So what are the potential implications for the future of anti-trust enforcement in China? As the NDRC has become more proactive and gains more experience in this area, we would expect it to expand the scope of its attention beyond resale price maintenance and into other areas of anti-trust related to price, such as price discrimination, price gouging, bid rigging or price signaling. We would also expect the Administration of Industry and Commerce, whose investigatory activity (limited in scope to areas outside of purely pricing) has been relatively low key, to also step up its activity in this area. As suggested by its latest investigations into foreign infant milk formula companies, the NDRC appears to feel confident enough to press ahead with plans to investigate foreign companies. MNCs should prepare by conducting their own internal audits with the help of outside counsel to ascertain the extent of their exposure to risk of enforcement for AML violations.”

See also another attached article SAIC Launches First Abuse of Dominance Investigation under AML by Mr. Corne about China’s State Administration for Industry and Commerce (SAIC) investigation against Sweden’s Tetra Pak for alleged abuse of market dominance through tying and discrimination. This is the SAIC’s first publicly announced investigation into abuse of dominance since the PRC Anti-Monopoly Law (AML) came into force in 2008. The investigation also represents an extraordinary joinder of more than twenty provincial and municipal branches of the SAIC countrywide that have been mobilized jointly to conduct the investigation against the foreign company. Such actions mirror the private antitrust actions brought by US states and their attorney generals in antitrust cases.

RUMORS OF POSSIBLE CHINESE ANTITRUST ACTIONS AGAINST FOREIGN AUTOMOBILE COMPANIES

Recently, there have been rumors that the National Development and Reform Commission (NDRC), the Chinese governmental authority that regulates price monopoly activities in China, has been working with the China Automobile Dealers Association (CADA) to collect data regarding the pricing behavior of foreign auto manufacturers.  The thought is that this data will be used to determine whether the foreign manufacturers are requiring their distributors and retailers to resell products at a minimum price. This practice, known as a resale price maintenance (RPM), may violate China’s Anti-Monopoly Law (AML).

Many commentators believe that although not acknowledged publicly, the NDRC is investigating the situation and more investigations against various industries are underway.

What is sauce for the goose is sauce for the gander.

SECURITIES

SEC GRANTS DELAY IN PROCEEDING AGAINST US ACCOUNTING FIRMS FOR  REFUSING TO RELEASE AUDIT DOCUMENTS OF CHINESE COMPANIES

On October 2, 2013, in the attached order, SEC ORDER ACCOUNTING FIRMS the U.S. Securities and Exchange Commission (“SEC”) granted a request from an administrative law judge to give an additional 100 days to determine whether top accounting firms, such as Ernst & Young, Deloitte and Price, Waterhouse, have to produce audit documents of Chinese company clients that are suspected of defrauding their US investors through reverse mergers.  In December 2012 the SEC started this case because it believes the accounting firms, including the Big 4, have refused to to cooperate with document requests in an investigation into China-based companies whose securities are publicly traded in the U.S. in violation of US security laws.

The accounting firms argue that they fear violating Chinese secrecy laws. As evidenced by the complaints on this site, the SEC has cracked down in the last few years on fraudulent reverse mergers, in which Chinese companies have used existing public shell company to merge with a private operating company, leaving the shell company as the surviving legal entity. The crackdown, however, has been delayed by the Chinese privacy laws, which bar China-based auditors, including the subsidiaries of US accounting firms, from turning over Chinese client information.

The accounting firms have been fighting requests for audit paperwork related to Chinese companies accused of fraud on US investors.  In July, following bilateral investment talks, the U.S. announced that China had agreed to turn over certain audit documents to the SEC and the Public Company Accounting Oversight Board (“PCAOB”). That deal came shortly after the PCAOB announced a memorandum of understanding with the China Securities Regulatory Commission and China’s Ministry of Finance to ease restrictions on release of audit information in fraud investigations.

COMPLAINTS

A number of new securities complaints cases have been filed against Chinese companies.

On October 8, 2013, Warner Technology & Investment Company filed a complaint for securities fraud against Sichuan Apollo Solar Energy Technology Co. Ltd. and Renyi Hou. SECURITIES APOLLO

On October 9, 2013, the Securities and Exchange Commission brought a major fraud case against a Hong Kong Company CKB 168, Cyber Kids Best Education Ltd., and various individuals and other companies, such Rosanna LS Inc., USA Trade Group, Inc., Ouni International Trading Inc., E. Stock Club Corp., EZ Stock Club Corp., HTC Consulting LLC and Arcadia Business Consulting Inc.  SEC CK CASE

The complaint states that the SEC “brings this emergency action to halt an ongoing pyramid scheme and offering fraud, which primarily targets members of the Asian-American community.” The Complaint goes on to state:

“To date, the Defendants have harvested $20 million, and likely much more, from at least 400 investors in New York, California, and elsewhere in the United States, as well as millions of dollars from investors in Canada, Taiwan, Hong Kong, and other countries in Asia. . . .

Through publicly available websites, promotional materials, seminars, and videos posted to the internet, as well as through other efforts intended to create the appearance of a legitimate enterprise, Defendants have falsely portrayed CKB as a profitable multi-level marketing company that sells web-based children’s educational courses.

What CKB really sells, however, is the false promise of easy wealth. . . . Defendants have falsely portrayed CKB as a profitable multi-level marketing company that sells web-based children’s educational courses.

In fact, CKB has little or no retail consumer sales to generate the promised returns and no apparent source of revenues other than money received from new investors. Instead, CKB is a classic pyramid scheme that depends on the recruitment of new investors to pay promised returns to existing ones. CKB’s inevitable collapse will cause substantial investor losses.”

On October 15, 2013, another class action securities complaint was filed against Chinese company, Light in the Box.  LIGHT COMPLAINT

On October 18, 2013, the US Securities and Exchange Commission filed a securities fraud complaint against Yuhe International Inc. and Gao Zhentao in Weifang, Shandong Province. YUE COMPLAINT

On October 28, 2013, Phuong Ho filed an attached class action securities complaint against NQ Mobile Inc. of Beijing China, several Chinese individuals, Piper Jeffray, Oppenheimer and Canaccord.  HO NQ MOBILE

SECURITIES CLASS ACTION CERTIFICATION–CHINA INTELLIGENT LIGHTING

On October 28, 2013, a Federal Judge in California certified a class of shareholders suing China Intelligent lighting and Electronics Inc. for securities fraud, alleging that the company and the underwriters exaggerated the company’s revenues ahead of its public offering in June 2010.  According to the Plaintiff shareholders, China Intelligent overstated its revenue for the 2008 and 2009 fiscal years by roughly $74 million in its offering documents, which were prepared with help from underwriters WestPark Capital Inc. and auditors MaloneBailey LLP and Kempisty & Co. PC, after which its auditor resigned and the U.S. Securities and Exchange Commission banned public sales of company stock. See attached order.  CTORDER CLASS CERTIFICATION

Topics:  Antidumping Duties, Antitrust Conspiracies, AU Optronics Corp, Audits, Auto Manufacturers, China, Class Action, Countervailing Duties, Customs, Exports, False Claims Act, Fraud, Government Shutdown, Hong Kong, Imports, ITC, Japan, Lobbying, MOFCOM, Patent Infringement, Patents, Plastic Solar Cells, Price-Fixing, Rare Earth Metals, SEC, Securities Fraud, Tariffs, Tolling, Trans-Pacific Partnership, WTO

Published In: Antitrust & Trade Regulation Updates, Business Torts Updates, Intellectual Property Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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