Chinese Reverse-Merger’s Auditor Resigns, Shares Fall 18%.

Yesterday Yuhe International, Inc. (NASDAQ: YUII) announced that Grant Thornton “is resigning as the Company’s independent registered public accounting firm effective immediately,” according to an 8-K filed by Yuhe. Yuhe’s share-price fell 18% yesterday.

Yuhe is the product of a reverse merger between a private Chinese company and a U.S. shell company completed in March 2008. Yuhe has been listed on the NASDAQ since October 30, 2009, according to a Yuhe 8-K dated October 29, 2009. Yuhe’s management and promoters rang NASDAQ’s opening bell on December 30, 2009.

Research published by has focused on two other Chinese reverse-mergers: China Sky One Medical, Inc. (NASDAQ: CSKI) and American Oriental Bioengineering, Inc. (NYSE: AOB). has also published reports on regulatory deficiencies surrounding U.S. listings of questionable Chinese companies, particularly at the NASDAQ.

On March 10th, published a report questioning whether CSKI’s auditor, Moore Stephens, P.C., would resign as a result of a lawsuit brought against it for securities fraud related to CSKI’s financial statements.

Yuhe has the same investor-relations representative as CSKI, Crocker Coulson of CCG Investor Relations.

Grant Thornton’s resignation as Yuhe’s auditor surrounds “certain related party loans” that “have constituted prohibited transactions under Section 402 of the Sarbanes-Oxley Act of 2002,” according to Yuhe’s 8-K filed yesterday.

The 8-K states, “Grant Thornton noted during its audit procedures that the Company has been unable to eliminate the occurrence of related party loans… The Company concluded that a material weakness continues to exist with respect to the Company’s compliance with Section 402 of the Sarbanes-Oxley Act of 2002.”

Grant Thornton had only been appointed as Yuhe’s auditor on December 8, 2009. Yuhe’s previous auditor, Child, Van Wagoner & Bradshaw, PLLC of Salt Lake City, Utah and Hong Kong, has now been reappointed.