Shareholders claim Gulf Resources engaged in undisclosed relatedpartytransactions, and Chinese regulatory filings showed that the company was materially smaller than it claimed to be.
As for the relatedpartytransactions, investors who have been following Kandi closely for several years tell me that these transactions have long been disclosed, and while I found the article hard to follow, I did not see anything which made me believe that company insiders were using relatedpartytransactions to drain money from the company.
Dyck and Zingales say short-sellers started tipping off selective journalists about the "related-party" transactions involving Enron's senior officers and their insider trading.
They will have to assess whether such transactions fall under the 'related party transaction' provisions of the FFP regulations and if so, what the fair value of the transaction really is.