Item 8.01. Other Events
.
China United Insurance Services, Inc. (“CUIS”
or the “Company”) and Cheng-Hsiung Huang (“Mr. Huang”), one of CUIS’s former employees, have agreed
to settle fraud charges brought by the Securities and Exchange Commission (the “SEC”) relating to a scheme to manipulate
the Company's trading volume. Neither the Company nor Mr. Huang realized financial gain from the scheme and both CUIS and Mr. Huang
substantially cooperated with the SEC’s investigation into the activities that led the SEC to bring the fraud charges.
The SEC’s complaint (the
“SEC’s Complaint”) alleges that, from approximately December 2013 through March 2018, the Company and Mr.
Huang schemed to deceive the investing public and Nasdaq, for the purpose of obtaining a listing on Nasdaq, that the trading
volume in the Company's common stock was derived from bona fide market activity. Mr. Huang, acting on the Company's behalf,
used multiple brokerage accounts to engage in numerous transactions in the Company's common stock. When Mr. Huang's trading
was flagged by a U.S.-based brokerage firm for high volume and possible prearranged trading and several of the accounts were
frozen, Mr. Huang and two colleagues contacted the brokerage firm and made false statements about their identities, their
relation to the Company and their reasons for trading.
The SEC's Complaint alleges that the Company
and Mr. Huang violated the antifraud provisions of Section 17(a) of the U.S. Securities Act of 1933, as amended, and Section 10(b)
of the Securities and Exchange Act of 1934, as amended, and Rule 10b-5 thereunder. Without admitting or denying the allegations
in the complaint, both CUIS and Mr. Huang agreed to the entry of a final judgment (the “Proposed Final Judgment”) that
enjoins them from violating the charged provisions of the federal securities laws, orders the Company to comply with its undertaking
to retain an independent compliance monitor for a period of not less than one year, and orders Mr. Huang to pay a penalty of $30,000.
Based upon the Company's substantial cooperation with the SEC’s investigation, the SEC is not seeking a monetary penalty
against the Company.
The SEC’s Complaint, the Proposed Final
Judgment and documents ancillary thereto were filed on December 20, 2018 with the United States District Court for the Sothern
District of New York (the “District Court”). As of the date of this Current Report on Form 8-K (this “8-K”),
the District Court has not entered its final judgment with respect to the matters set forth in this Current Report. When additional
information becomes available, the Company will file an amended Current Report reporting such information.
The SEC Complaint, the Proposed Final Judgment,
the Company’s Consent and Mr. Huang’s Consent are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively,
and are incorporated by reference into this Current Report.
Caution Regarding Forward-Looking Statements
This Current Report includes information that constitutes forward-looking
statements. Such forward-looking statements often contain words such as “believe,” “expect,” “anticipate”
“intend,” or “will,” although not all forward-looking statements contain these identifying words. By their
nature, forward-looking statements address matters that are subject to risks and uncertainties. Examples of such forward-looking
statements include, but are not limited to, statements of our expectations regarding the matters described above.
These forward-looking statements are based on our current beliefs,
assumptions and expectations concerning future events, which, in turn, are based on information currently available to the Company.
Such forward-looking statements include actions taken by the Company, the SEC or the District Court with respect to the matters
covered by this Current Report . Although we believe that the expectations underlying any of these forward-looking statements are
reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. A
variety of factors could cause actual events or results to differ materially from those expressed or contemplated by the forward-looking
statements including, without limitation, additional information that may become known to the Company in connection with the matters
that are the subject of this Current Report or that subsequent events may occur that require the Company to take additional action
with respect thereto.
All forward-looking statements included in this Form 8-K are
expressly qualified in their entirety by these cautionary statements and the Company undertakes no obligation to publicly update
or revise any forward-looking statement except to the extent required by applicable securities laws.