Rodman & Renshaw, LLC : Yuhe International, Inc. (Secondary Offering) Summary: According to the complaint, it is alleged that investors in Yuhe's secondary offering made on or about October 20, 2010 were misled by a series of materially false and misleading statements concerning Yuhe's business. Defendants failed to make a reasonable investigation into or, alternatively, did not possess reasonable grounds to believe that the statements contained in the Prospectus Supplement were true. Yuhe reported the purchase of thirteen breeder farms from Weifang Dajiang Corporation in December 2009 for approximately $15 million and further represented that these farms were contributing to the revenue of the Company in 2010 when in fact the purchase did not occur and the 80% initial down payment of $12.1 million to purchase the farms had been transferred from the Company's books to a private account of Yuhe's CEO. It was not until nearly eighteen months later, on June 13, 2011, that the market first obtained any information relating to Yuhe's material misrepresentation. On that date, an investment fund, Geoinvesting, issued a report stating that it had conducted its own investigation into the reported December 2009 purchase of the thirteen breeder farms and found evidence showing that the transaction did not occur.
The complaint alleges that Yuhe finally admitted on June 17, 2011 that the purchase had not occurred and its CEO and CAO had taken $12.1 million from Yuhe and placed it in a separate account whereby the CEO purportedly attempted, beginning in March 2010, to purchase thirteen different farms in an effort to cover-up the illusory nature of the Dajiang transaction.
On June 16, 2011, Yuhe's stock dropped almost 52% from its June 15, 2011 closing price of $4.08 per share, to $1.96 per share. The stock dropped 38% from June 16 to June 17, 2011, to $1.2099 per share, when trading was halted by NASDAQ. Between June 15 and 17, 2011, Yuhe's common stock lost more than 70% of its value.
SIC Code: 2015
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