LAS VEGAS - HF Foods Group Inc. (NASDAQ: HFFG), a major distributor to Asian restaurants in the U.S., has reached a final settlement with the U.S. Securities and Exchange Commission (SEC) over allegations of securities law violations by its former top executives. The company, which did not admit or deny the findings, consented to a cease-and-desist order and will pay a civil monetary penalty of $3.9 million.
The SEC's investigation, which concluded today, centered on accusations of materially false disclosures and fraudulent conduct by HF Foods' former Chairman and CEO Zhou Min Ni and former CFO Jian Ming "Jonathan" Ni. The Order pertained to infractions of multiple sections of the Securities Act of 1933 and the Securities Exchange Act of 1934, among others.
The SEC took into account the company's swift remedial steps and cooperation during the inquiry when accepting HF Foods' settlement offer. Earlier, on June 3, 2024, the SEC had filed charges against the two former executives in District Court, resulting in them agreeing to pay fines, disgorgement, and accepting officer and director bars. Zhou Min Ni also consented to a conduct-based injunction limiting his involvement with the company.
In addition to the SEC settlement, a Special Litigation Committee of HF Foods' Board of Directors had previously secured a monetary settlement from the former executives, which was approved by the Delaware Chancery Court.
CEO Peter Zhang stated that the company is looking forward to moving past these issues and focusing on ethical business expansion. HF Foods, headquartered in Las Vegas, Nevada, prides itself on supplying the growing demand for Asian American cuisine through a robust network of distribution centers and supplier relationships in the United States, South America, and China.
The information for this report is based on a press release statement.
In other recent news, HF Foods Group Inc. has reported significant changes in its board and executive team. The company announced the immediate resignations of two board members, Valerie P. Chase and Russell T. Libby, as disclosed in a recent SEC filing. The company clarified that these resignations were not due to disagreements regarding operations, policies, or practices. In response to these resignations, HF Foods has initiated a search for new independent directors.
On another note, HF Foods has appointed Cindy Yao as its new Chief Financial Officer, effective from May 1, 2024. Yao, who has over 30 years of financial and accounting leadership, previously served as CFO and Executive Vice President at Markel (NYSE:MKL) Food Group.
InvestingPro Insights
As HF Foods Group Inc. (NASDAQ: HFFG) works to put regulatory challenges behind it, investors may find the company's financial metrics and market performance to be of particular interest. According to InvestingPro data, HF Foods is currently trading at a P/E ratio of 57.72, which is high but adjusts to a more favorable 40.71 when considering the last twelve months as of Q1 2024. An even more compelling figure is the company's PEG ratio during the same period, which stands at 0.42, suggesting that the stock may be trading at a low price relative to near-term earnings growth.
Despite recent stock price volatility, with a 6-month price total return showing a significant dip of -32.93%, the company's liquid assets surpass short-term obligations, indicating a degree of financial resilience. Additionally, the InvestingPro Fair Value estimate for HF Foods is 4.72 USD, hinting at a potential undervaluation at the previous close price of 3.3 USD.
Investors looking to delve deeper into the financial health and future prospects of HF Foods can uncover further insights with the array of InvestingPro Tips. For instance, while the stock has experienced substantial price fluctuations over the last six months, it remains profitable over the last twelve months, and it trades at a low revenue valuation multiple. These factors, combined with the company's lack of dividend payments, could influence investment strategies.
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