NEW YORK, Aug. 10, 2012 /PRNewswire/ -- Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential securities fraud at American Oriental Bioengineering Inc. ("AOBI" or the "Company") (OTC Markets: AOBI).
The investigation focuses on whether the Company and its executives violated federal securities laws by failing to disclose that: (1) certain of the Company's capsule products maintained chrome levels far exceeding humanly tolerable limits; (2) the Company's financial statements contained material inconsistencies; (3) the Company's internal controls over financial reporting were deficient; and (4), as a result of the foregoing, the Company's statements were materially false and misleading at all relevant times.
On March 16, 2012, the Company's independent registered public accounting firm, Ernst & Young Hua Ming ("E&Y"), informed AOBI's Audit Committee of inconsistencies in the Company's financial statements for fiscal year 2011. Approximately one month later, on April 19, 2012, the Company disclosed "onsite short notice inspections" conducted by the Chinese State Food and Drug Administration at four of AOBI's five manufacturing subsidiaries after capsule products were discovered with chrome levels far exceeding humanly tolerable limits. Then, after being delisted by the New York Stock Exchange on May 25, 2012, the Company's common stock plummeted nearly 62% when it resumed trading over-the-counter on May 29, 2012.
On June 15, 2012, the Company disclosed that E&Y had withdrawn its audit reports for the Company's financial statements for the years ended 2009 and 2010, after E&Y concluded that it could no longer rely on management's representations in connection with its audits of the financial statements for those years.