OSC Panel Finds Zungui Haixi Corporation, Yanda Cai and Fengyi Cai in Breach of Ontario Securities Law

TORONTO – In a decision made yesterday, an Ontario Securities Commission ( “OSC”) panel found that Zungui Haixi Corporation (“Zungui”), Yanda Cai (a director and Chief Executive Officer of Zungui), and Fengyi Cai (a director and Chairman of Zungui) breached Ontario securities law and acted contrary to the public interest.

In its decision, the Commission found that:

• Zungui failed to maintain an audit committee, as required by Ontario securities law, since September 22, 2011;
• Zungui failed to file audited annual financial statements on or before the 120th day after the end of its most recently completed financial year;
• Yanda Cai and Fengyi Cai authorized, permitted or acquiesced in the commission of the violations by Zungui;
• Yanda Cai engaged in conduct contrary to the public interest by imposing limitations on the scope of the audit procedures of Zungui’s auditor during its audit of Zungui’s financial statements for the year ended June 30, 2011;
• Yanda Cai and Fengyi Cai failed to cooperate with Zungui’s audit committee and special committee in addressing Zungui’s auditor’s concerns and obstructed an independent investigation of those concerns by the special committee of Zungui’s board of directors and KPMG Forensic, which was hired to assist in the investigation;
• Yanda Cai and Fengyi Cai failed to respond to Staff inquiries and requests to produce documents relevant to the business of Zungui; and,
• Zungui failed to produce documents required by Staff.

Zungui is a public company and its common shares are listed on the TSX Venture Exchange under the symbol ZUN.

Zungui’s securities have been subject to a cease trade order originally made by the OSC on September 16, 2011 and subsequently extended. The cease trade order has been extended to the conclusion of a sanctions hearing.

 

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