Hall of Shame
China Integrated Energy (CBEH US)
China Integrated Energy, (CBEH) was a Delaware corporation operating in the PRC selling finished oil products, heavy oil products, and biodiesel fuel. It also operated retail gas stations. It listed on the NASDAG via a reverse merger in 2007.
On December 1,2010, Spruce Point Capital, released a report - China Integrated Energy’s Biodiesel Business: Cause for Concern. In the the report, they have doubts about whether the company is being accurately represented to U.S. investors. The report raised a number of questions :-
- Why are CBEH’s Biodiesel Gross Margins Stable In a Cyclical Industry?
- Why are CBEH’s Plant Capital Expenditures Unusually Low?
- Why is CBEH’s Auditing Firm in Florida?
- Why Do SAIC Financials Differ From SEC Financials?
March 16th 2011 - Sinclair Upton Research published a report "CBEH - A troubled Company stealing from shareholders" In the report it alleged that CBEH’s SEC filings overstated revenues, compared with revenues reported in the Chinese filings. CHEB had apparently prepared two sets of financial statements: one, presumably accurate, set that it filed with Chinese regulators, and another false set that they filed with the SEC. The report also asserted that China Integrated Energy had been funnelling money to corporations owned by the son of CEO Xincheng Gao.
The next day, analysts at Roth Capital Partners downgraded China Integrated Energy’s shares from a “BUY” status to a “NEUTRAL” status. They also reported that they had independently obtained the Chinese filings referenced in Sinclair Upton Research’s report, and confirmed the prior report’s accuracy. China Integrated Energy issued a letter to shareholders and vigorously denied it had made any misstatements in its financial statements and SEC filings, and denied all other accusations in the Sinclair Upton Research report.
March 28, 2011 - another analyst firm, Alfred Little, issued a report "Time‐Lapse Video Shows China Integrated Energy Defrauded Investors". It was a detailed report reviewing China Integrated Energy’s Chinese filings and audited financial statements and calling the company a “complete hoax.” In response to the accusations and resultant drop in share price, China Integrated Energy hired law firms and auditors to conduct an internal investigation.
April 20, 2011, NASDAQ halted trading in CBEH shares.
April 21, 2011 A director and chairman of the Audit Committee and also the Investigation team resigned, citing management’s refusal to cooperate in the investigation.
April 27, 2011 The company’s outside auditor, KPMG, resigned and cautioned investors that the SEC filings it assisted in preparing should no longer be relied upon.
June 16, 2011 The shares were delisted from the NASDAQ.
July 25, 2016 - China Integrated Energy reaches a deal in investor suit. Shareholders of China Integrated Energy Inc., pursuing a lengthy class action battle over claims the company misstated revenue, reached a $2. 1 million deal with the oil and biodiesel company and certain members of its leadership to end the litigation.
Spruce Point: China Integrated Energy's Biodiesel Business: Cause for Concern, 1 Dec 2010
Alfred Little: Time‐Lapse Video Shows China Integrated Energy Defrauded Investors, 28 Mar 2011
China Integrated Energy: Independent investigator resigned, 21 Apr 2011
China Integrated Energy: Auditors KPMG resigned, 27 Apr 2011
Shareholders Foundation: China Integrated Energy- Investor Securities Class Action Lawsuit, 25 Mar 2011
US District Court: Legal Document, 4 Aug 2014
China Integrated Energy: Annual Report 2009
China Integrated Energy: Annual Report 2010
China Integrated Energy: Annual Report 2011