The US Securities and Exchange Commission (SEC) has brought charges against Shanchun Huang, the CEO of Future FinTech Group (FTFT.O), alleging fraudulent activities and disclosure lapses related to trading in the company’s stock prior to his assumption of the leadership role. The SEC claimed that Huang utilized an offshore account to engage in stock trading shortly before his appointment as CEO in 2020 and failed to disclose his beneficial ownership of Future FinTech shares, as well as related transactions.
Jacob Frenkel, Huang’s legal representative, responded to the allegations, expressing confidence in the eventual resolution of what he perceived as a misguided civil complaint. Huang has robust defenses against the SEC’s claims, according to Frenkel, and is hopeful for a positive outcome.
The SEC’s findings suggested that Huang’s trading activities, which commenced in January 2020, involved actions aimed at artificially inflating the stock prices of Future FinTech Group. These actions represented a significant portion of the daily trading volume and included multiple buy orders. The scrutiny from the SEC comes at a time when Future FinTech faced potential delisting from the Nasdaq exchange due to its share price falling below the minimum bid price threshold of $1 per share.
As a result of these developments, Future FinTech’s shares experienced a decline of approximately 17% in after-hours trading on Thursday. These allegations and charges have raised concerns about the integrity and transparency of the financial markets, especially in the context of a company facing the possibility of delisting due to its stock price plummeting. The response from Huang’s legal representative also indicates the potential for a protracted legal battle, which may further impact the company’s stock performance and overall market confidence. It remains to be seen how Future FinTech will navigate through these challenges and restore investor trust in the wake of these allegations.