On February 28, 2013, the SEC filed a complaint against Keyuan Petrochemicals, Inc. and Aichun Li. The SEC alleged that Keyuan Petrochemicals, Inc. violated the "anti-fraud, reporting, books and records, and internal control provisions of the federal securities laws." In particular, the SEC alleged that in its first year as a public company in the U.S., "Keyuan systemically failed to disclose in its SEC filings numerous material related party transactions between the company and its CEO and controlling shareholders, entities controlled by or affiliated with these persons, and entities controlled by Keyuan's management or their family members." The SEC also alleged that Keyuan had an off-balance sheet cash account that resulted in Keyuan's "reported balances in its financial statements for cash, receivables, construction-in-progress, interest income, other income, and general and administrative expenses were misstated."

On February 28, 2013, the SEC published a litigation release in this matter. According to the release: "Keyuan and Li have consented to the entry of a judgment permanently enjoining them from violations of the respective provisions of the Securities Act and Exchange Act. Keyuan has agreed to pay a civil penalty in the amount of $1,000,000... The proposed settlement is subject to approval by the court."

On February 28, 2013, the SEC announced that it charged China-based petrochemical company Keyuan Petrochemicals, Inc. ("Keyuan") and its former chief financial officer Aichun Li (together, "Defendants") with accounting and disclosure violations. The SEC alleges that Keyuan, which was formed through a reverse merger in April 2010, systematically failed to disclose to investors numerous related party transactions involving its CEO, controlling shareholders, and entities controlled by management or their family members. Keyuan also operated a secret off-balance sheet cash account to pay for cash bonuses to senior officers, travel and entertainment expenses and an apartment rental for the CEO, and cash and non-cash gifts to Chinese government officials. Without admitting or denying the SEC's charges, Defendants consented to the entry of a judgment permanently enjoining them from violations of the respective provisions of the Securities Act and Exchange Act and agreed to pay more than $1 million combined in order to settle the case. The proposed settlement is subject to court approval.

On July 1, 2013, Federal District Judge Rudolph Contreras entered final judgment against Keyuan Petrochemicals, Inc. pursuant to the consent of Keyuan Petrochemicals, Inc.