Chinese small caps are considered by industry experts as some of the biggest scams on Wall Street because nobody knows if what they are saying in their corporate filings is actually the truth.
Check out the documentary “China Hustle” to learn more.
(SEC) “China’s state security laws are invoked at times to limit U.S. regulators’ ability to oversee the financial reporting of U.S.-listed, China-based companies. In particular, Chinese laws governing the protection of state secrets and national security have been invoked to limit foreign access to China-based business books and records and audit work papers. As a result, for certain China-based companies listed on U.S. stock exchanges, the SEC and PCAOB have not had access to the books and records and audit work papers to an extent consistent with other jurisdictions both in scope and timing.”
“To better inform investors about the PCAOB’s inability to conduct inspections in certain jurisdictions, the PCAOB publishes on its website a list of companies whose auditors are located in jurisdictions where there are obstacles to PCAOB inspections. The current list includes 224 unique issuers, and they represent a significant portion of the capital markets, with a combined market capitalization exceeding $1.8 trillion. Out of these 224 issuers, 213 have auditors based in mainland China or Hong Kong, while the remaining 11 issuers have auditors based in Belgium.” Link
Here are a few examples.. You can never know for certain, but you can get pretty good idea sometimes.