Qiao Xing Universal (Xing) listed on the NASDAQ in 1999. The company originally made telecom terminals but diversified into mineral resources in 2009. In 2007, the company disclosed that profits between FY03 and FY05 had been over-stated by 19%. This prompted a more than 80% decline in the company's shares over the next year and a class action suit. Financial performance began to deteriorate from here on (a typical trait of companies accused of fraud), with profits turning to losses in FY09. In December 2010, Xing acquired a mining company for US$88m but failed to disclose that its CEO (founder and largest shareholder) was a related party. In November 2011, its CEO suddenly resigned. In April, the NASDAQ suspended Xing's shares and the company then disclosed that its former CEO had transferred funds to his own account without notice to or approval of the audit committee or board. The company's FY07 financials had traits similar to past frauds and we would argue that, on balance, Xing was likely faking past profits. 

Last updated November 2021

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