但与其他取消注册的大多数中概股不同，上海双金生物科技有限公司并没有就此销声匿迹。它对SEC的行动提起了上诉。中国生物找了一家新的审计机构Weinberg and Co.，这是一家总部位于佛罗里达州博卡拉顿的小型注册会计师事务所。Weinberg为很多中国公司的借壳上市提供了审计服务。但美国上市公司会计监管委员会（PCAOB）最新的调查报告发现，它调查的5项审计中有4项存在非常严重的缺陷，PCAOB认为Weinberg没有获得充足的合格证明材料来支持其对发行人财务报告的审计意见。这可能是在PCAOB报告中所能看到的最糟糕的结论了。但PCAOB的处罚流程非常缓慢，可能要到几年后，Weinberg才需要为这些审计行为承担责任。与此同时，其客户的投资者们正暴露在风险中。
China-Biotics has been one of my poster children for accounting frauds in China. It blew up in 2011 after it was attacked by Citron. At the time, I observed that with 54% of its assets in cash, the proof would be in whether the auditors were able to confirm the cash balances.
A month later auditor BDO resigned after they discovered that the company had sent them to a fake bank website to confirm the cash balances. There have been a number of problems with bank confirmations for Chinese companies, but this was probably the most audacious.
The SEC suspended trading the stock and in February 2012 an administrative trial judge revoked the company’s securities registration for failing to file annual reports. The SEC has revoked the registration of many Chinese companies when they “go dark”.
What is unusual about China-Biotics is that unlike most other deregistered Chinese companies it did not just disappear. An appeal was filed against the SEC action. The company found a new auditor, Weinberg and Co., a small CPA firm based in Boca Raton, Florida. Weinberg audits a number of Chinese reverse mergers. Its most recent PCAOB review found deficiencies in four of five audits reviewed that were so serious that the PCAOB concluded that Weinberg had not obtained sufficient competent evidential material to support the opinion on the issuer’s financial statements. That is about as bad as it gets in a PCAOB report. PCAOB disciplinary procedures are so slow it could be years before Weinberg faces accountablilty for those audits. In the meantime, investors in their clients are exposed.
China-Biotics has now asked the SEC Commissioners to reconsider the decision to revoke their registration. The company’s lawyer argues they are now up to date in their filings. Although the CFO has been replaced, the CEO is still there. If the SEC commissioners vote to let this one trade again, they will let anything trade.