Rui Xing Goes To The Delisting, And Then?

Rui Xing coffee (hereinafter referred to as "Rui Xing") financial fraud has finally gone to the abyss of delisting. Although triggering the delisting is expected by the market, NASDAQ launched the delisting procedure only after more than a month after its financial fraud.

On the evening of May 19th, Rui Xing issued a statement on the official website investor relations page. The company received a written notice from the SEC Listing Qualifications Staff in May 15th, and the NASDAQ Exchange decided to delisting the company. This incident has been exposed for 48 days from its financial fraud, and is about 1st Anniversary Full time from its listing (May 17, 2019).

But the NASDAQ startup Rui Xing delisting procedure is not the end of the problem for all participants involved in the lucky event. Instead, the delisting has brought more uncertainties to the current situation of Rui Xing complex. For domestic investors, the lucky event will be a costly but significant investor education course.

After making the decision to let Rui win delisting, Nasi finally resumed his trading in May 20th, and the price of Rui Xing's stock fell more than 50%. However, as far as the current situation is concerned, Rui Xing is not going to be delisted immediately by the NASDAQ. Rui Xing said he had planned to hold a hearing with the NASDAQ. Before the outcome of the hearing, he would continue to be listed on Nasdaq, and the hearing would normally be held 30 to 45 days after the date of receipt of the request.

How long will it take to withdraw from the market?

Although NASDAQ has put forward a proposal to remove lucky cards, Rui Xing said the company plans to ask the NASDAQ hearing group to hold hearings. Shares will continue to trade on the NASDAQ before the outcome of the hearing.

On the NASDAQ delisting system, tiger securities research team to the twenty-first Century economic news reporter said, according to the NASDAQ Exchange delisting rules, delisting can be divided into active delisting and passive delisting. Active delisting can be divided into three types, namely, company transfer, privatization, acquisition and merger. Passive delisting is a requirement for continuous listing.

The announcement of the delisting notice on Nasdaq, according to the delisting notice, will be based on the delisting: first, Rui Xing's disclosure of false transactions in April 2nd has raised concerns about public interest; secondly, the company has not disclosed important information publicly in the past, that is, it has not disclosed the business model for implementing the previously disclosed false transactions.

According to the information obtained by reporters, at present, the delisting of NASDAQ adopts the hearing system. When a listed company receives a delisting notice within 45 days, if there is any objection, the company has the right to appeal step by step: first, the listing qualification examination department of the Nasdaq market, then the hearing group, then the listing and hearing Review Committee, then the NASDAQ board of directors, and the last SEC will carry out the most. Final ruling. At present, Rui Xing will start this series of processes.

That is to say, there is a possibility of recovering the delisting theoretically, and Hao Junbo, director of the US stock litigation lawyer and Hao Jun Bo law firm of Beijing, said: "from the procedural point of view, Rui Xing still has the opportunity to win the security card, but it is very difficult. The hearing is equivalent to a chance for Rui Xing. If this opportunity is passed, Rui Xing can put forward enough justifications and succeed in persuading NASDAQ to change the decision to request Delhi to withdraw the cards. Then Rui Xing can continue to retain the qualification of listing. If he fails, he will still have the opportunity to appeal to NASDAQ again.

Despite the news of the delisting, Mr Rui said that he did not respond. Then, late in the night, chairman Lu Zhengyao issued a statement saying that the final investigation result of the Nasdaq was not required. The company demanded the company to withdraw from the market. From the information released by the statement, Lu Zheng Yao and Rui Xing in order to maintain the qualification of the listing or to make the best use of the hearing.

"Maintaining the qualification of listed companies is still of great significance for the current situation. The equity of listed companies is valuable anyway, while retaining the qualification of listed companies will also be a way to solve the current predicament on many levels. For investors, if Rui Xing does not withdraw from the market, then from the level of liquidity and equity value, it is far better than the situation after the company's delisting. A large brokerage firm familiar with overseas listing projects in Beijing said.

Where do investors go from here?

If Rui Xing finally delisted, all investors had to face two big problems: one is that since the exposure of financial fraud, Rui Xing's share price has dropped more than 90%. Investors have suffered serious losses because of the financial fraud of Rui Xing, and whether it will be claimed after the delisting, and how to claim it.

Hao Junbo told reporters: "at present, Rui Xing has not really delisted, even assuming that Rui Xing delisting, it will not affect investors in the United States securities class action, in fact, before the company has been in the US stock market has been delisting for many years is still litigation cases. For example, Yi Ju China had been delisting in the US stock market in 2016, but we are still collecting this class action lawsuit. "Therefore, whether a US stock listed company will withdraw from the market will not affect the proceedings. Of course, if the company is to withdraw from the market, the actual economic compensation capability will be reduced, which may affect the specific amount of compensation."

In addition, Hao Junbo added that considering the complexity of the case, it is very likely that his agency, such as the auditor's office, is also listed as a defendant for compensation. Before this Enron incident, a similar situation occurred. Although Enron was bankrupt, Enron's auditor's office was also demanded by investors for compensation.

In fact, at present, because of financial fraud, Rui Xing has been involved in lawsuits. According to the May 15th trial case released by the high court of Hongkong, at 10:30 a.m., 14 overseas institutions sued Rui Xing for trial in the Hongkong Special Administrative Region high court.

Hao Junbo told reporters that our agent's lucky investors now lose nearly 4 million dollars. The current progress in this case is that the court is still choosing the chief plaintiff and the chief counsel. Once the chief plaintiff and the chief counsel are selected, the court can proceed to the next proceedings.

Judging from the feedback from the market, Rui Xing is a delisting or a big probability event. Therefore, another key issue that concerns investor interests is whether investors who hold lucky shares in the market will still have trading places to trade.

According to reporter's understanding, as the A share market delisting company will return to the old three board market, the delisting of NASDAQ is also going back to the secondary market.

Tiger securities research team said that the US OTC market was very developed, providing a follow-up channel for the delisting mechanism. After delisting from the market, most companies can return to the OTC market (OTC market) except for companies entering bankruptcy proceedings.

Specifically, the Nasdaq's OTC market is mainly composed of OTCBB (shop quotation bulletin board market) and PINK SHEETS (pink market), and delisting companies can choose which market to list according to their own wishes.

Tiger Securities believes that the possibility of Rui Xing to go to OTCBB is relatively low, and the probability of going to PINK SHEETS is even higher. Compared with the market, the information transparency and information quality of the powder market is worse than that of OTCBB.

"Generally speaking, if Rui Xing delisting, small and medium shareholders may only go to Rui Xing remaining stock in the single market transaction, but the liquidity of the OTC market is very poor." Tiger securities investment research team said.