Ready for some reading? In a 45 page option, Sam Glasscock of the Delaware Chancery Court slams Chinese reverse-merger scam Fuqi International (FUQI) and its Board of Directors. Some choice tidbits:
Plaintiff has pled facts with particularity that show that the Fuqi board has abdicated its responsibilities because the investigation has been left in limbo, with no progress, for several months. Under that view of the facts, Fuqi management is not entitled to the business judgment rule’s protections. Beyond that, Fuqi management has refused to pay for the professional advisors—including auditors and legal counsel—of the Audit Committee performing the investigation. This lack of payment has thwarted what efforts could have been taken by the Audit Committee to investigate. To make matters worse, the independent directors, who could have conducted a meaningful investigation on behalf of the company, have resigned from their posts. Thus, the Plaintiff has alleged with particularity that the board has not only failed to move the investigation forward, but has also impeded that investigation. Nor does the record indicate that the investigation continues. It has been abandoned.
And yet the SEC still lets it trade.
Read the full decision here.