China Unlimited

[surfer44]

Informative paragraph from the FUQI proxy statement...

On July 1, 2013, the U.S. Securities and Exchange Commission (the “SEC”) filed certain fraud and related charges against the Company and its Chairman, Mr. Chong. In the complaint, the Commission alleged violations of the antifraud provisions of the securities laws, Section 10(b) of the Exchange Act of 1934 (Exchange Act) and Rule 10b-5 by the Company and Mr. Chong, as well as violations of reporting, recordkeeping and internal controls provisions of the federal securities laws, Sections 13(a), 13(b)(2)(A) & (B), and 13(b)(5) of the Exchange Act and Rules 13a-1, 13a-11, 13a-13, 13a-14, 13b2-1 and 13b2-2. Without admitting or denying the allegations, the Company and Mr. Chong agreed to settle the SEC’s claims against them and consented to the entry of a final judgment that: (i) permanently enjoined them from future violations of the federal securities laws; (ii) ordered Fuqi and Mr. Chong to pay civil penalties of $1 million and $150,000, respectively; and (iii) barred Mr. Chong from serving as an officer and director for five years, (a copy of the SEC Litigation Release No. 22739 can be found at https://www.sec.gov/litigation/litreleases/2013/lr22739.htm). On the same date, the SEC also announced the entry of an order revoking the registration of each class of registered securities of the Company for failure to make required periodic filings with the SEC (see Order Instituting Proceedings, Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Fuqi International, Inc., Administrative Proceeding File No. 3-15367, Exchange Act Release No. 69895 (July 1, 2013)). As noted above, Mr. Chong is barred from serving as an officer ordirector for five years of any issuer that has a class securities registered pursuant to Section 12 of the Exchange Act, or that is required to file reports pursuant to Section 15(d) of the Exchange Act. However, following the SEC’s entry of an order revoking the registration of each class of registered securities of the Company, Mr. Chong is not barred from serving as an officer and/or director of the Company and is not in violation of the terms of the SEC settlement agreement.