FUQI INTERNATIONAL, INC. SECURITIES LITIGATION – MARCUM LITIGATION

IF YOU PURCHASED OR ACQUIRED FUQI INTERNATIONAL, INC. COMMON STOCK BETWEEN MAY 15, 2009 AND MARCH 27, 2011, INCLUSIVE, AND/OR PURCHASED OR ACQUIRED FUQI INTERNATIONAL, INC. COMMON STOCK PURSUANT TO OR TRACEABLE TO THE SECONDARY OFFERING ON OR ABOUT JULY 22, 2009, YOU COULD RECEIVE A PAYMENT FROM A CLASS ACTION SETTLEMENT, AS DESCRIBED IN THE NOTICE.

IF YOU PREVIOUSLY SUBMITTED A PROOF OF CLAIM AND RELEASE FORM (“PROOF OF CLAIM”) IN CONNECTION WITH THE SETTLEMENT OF THE RELATED CLASS ACTION LITIGATION IN RE FUQI INTERNATIONAL, INC. SECURITIES LITIGATION, 10 Civ. 2515 (DAB) (THE “FUQI LITIGATION”), AND YOU WISH TO PARTICIPATE IN THIS SETTLEMENT, YOU DO NOT NEED TO SUBMIT AN ADDITIONAL PROOF OF CLAIM.

IF YOU HAVE NOT PREVIOUSLY SUBMITTED A PROOF OF CLAIM, TO CLAIM YOUR SHARE OF THE SETTLEMENT FUND, YOU MUST SUBMIT A VALID PROOF OF CLAIM POSTMARKED ON OR BEFORE NOVEMBER 24, 2017.

The purpose of the Notice is to inform you of the pendency and proposed settlement of this class action litigation (the “Action”) and of the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the settlement. The Notice is not intended to be, and should not be construed as, an expression of any opinion by the Court with respect to the truth of the allegations in the Action or the merits of the claims or defenses asserted. The Notice describes the rights you may have in connection with the settlement and what steps you may take in relation to the settlement and this Action.

Security and Time Period: Fuqi International, Inc. (“Fuqi”) common stock (stock symbol: FUQI; cusip no: 36102A207) purchased or acquired between May 15, 2009 and March 27, 2011, inclusive (the “Class Period”). During the Class Period, the stock symbol for Fuqi on the Nasdaq Stock Market was “FUQI”.

Settlement Fund: If the settlement is approved, a fund of $1,100,000 in cash will be established. Your recovery will depend on the number of shares of Fuqi common stock you, and other Class Members who file claims, purchased and sold and the prices at which you, and the other Class Members who file claims, purchased and sold those shares. On February 19, 2016, the Court granted final approval of a settlement involving Fuqi International, Inc. (“Fuqi”), which provided a settlement fund of $7,500,000 in cash. For the Fuqi settlement – as is the case with the current settlement with Defendant – your recovery will depend on the number of shares of Fuqi common stock you, and other Class Members who file claims, purchased and sold, and the prices at which you, and the other Class Members who file claims, purchased and sold those shares. For the Fuqi settlement, if claims are submitted for 100% of the eligible shares of Fuqi common stock, the estimated average recovery per share of common stock will be approximately $0.30 per share for shares traceable to the Secondary Offering on or about July 22, 2009 and $0.12 per share for those who do not have such claims, before deduction of Court-approved fees and expenses and costs of notice and claims administration. This settlement will provide an additional recovery to the Fuqi settlement as explained herein. If claims are submitted for 100% of the eligible shares of Fuqi common stock, the estimated average recovery per share of common stock for this settlement will be an additional approximately $0.044 per share for shares traceable to the Secondary Offering on or about July 22, 2009 and an additional $0.018 per share for those who do not have such claims before deduction of Court-approved fees and expenses and costs of notice and claims administration. The actual amount per share you could receive will depend on a number of factors that are explained in the Plan of Allocation and in Question 9. The number of shares submitted to share in the Settlement Fund is likely to be different than the total number of shares eligible to participate because some Class Members may not file claims on shares they purchased during the Class Period, and certain shares may have traded more than once during the Class Period and more than one Class Member may file claims on those shares.

Class: The Class includes all persons or entities who purchased or acquired shares of Fuqi common stock between May 15, 2009 and March 27, 2011, inclusive, and a Subclass of all persons or entities who purchased or acquired Fuqi common stock pursuant to or traceable to the Secondary Offering on or about July 22, 2009, and who were damaged thereby. Excluded from the Class are Defendant, its agents, representatives, predecessors, successors, subsidiaries, affiliated entities, partners, limited liability partners or members, shareholders, directors, officers, at all relevant times, members of the immediate families of the partners, limited liability partners or members, shareholders, directors, officers of Defendant, any entity in which the Defendant has or had a legal controlling interest, and the legal representatives, heirs, successors, or assigns of Defendant. Also excluded from the Class are the Defendants in the Fuqi Litigation (the “Fuqi Defendants”), Fuqi’s officers and directors, at all relevant times, members of their immediate families, any entity in which any of the Fuqi Defendants has or had a legal controlling interest, and the legal representatives, heirs, successors, or assigns of any of the Fuqi Defendants, and those Persons who timely and validly request exclusion from the Class pursuant to this Notice. References herein to the Class include the Subclass unless stated otherwise.

Reasons for Settlement: This Action arises from allegations that during the Class Period, Fuqi suffered from inadequate internal financial controls and accounting errors which resulted in Fuqi’s stock price being artificially inflated as a result of untrue or materially misleading statements concerning the Company’s financial results. Plaintiffs further contend that Fuqi’s independent auditor, Stonefield Josephson, Inc. (the alleged predecessor of Defendant Marcum), made certain statements in connection with Fuqi’s financial results knowing them to be false or misleading, or recklessly disregarding their false or misleading nature, and that investors suffered injury as a result of the alleged inflation in Fuqi’s stock price. Lead Plaintiffs and Lead Counsel believe that the Settlement provides the Class with a benefit now instead of years of further uncertain litigation, including motions to dismiss, disposition of summary judgment motions, a contested trial and likely appeals, with the possibility of no recovery at all.

The Defendant has denied and continues to deny each and all of the claims and contentions alleged in the Amended Class Action Complaint and believes that it has meritorious defenses to those claims and contentions. The Settlement shall in no event be construed as, or deemed to be evidence of, an admission or concession by the Defendant with respect to any claim of any fault or liability or wrongdoing or damage to the Class Members in this Action.

Nevertheless, Defendant has concluded that further defense of the Action would be protracted and expensive, and also has taken into account the uncertainty, risks and distractions inherent in any litigation.

If the Case Had Not Settled: The Settlement must be compared to the risk of no recovery after contested dispositive motions, trial and likely appeals. A trial is a risky proposition and Lead Plaintiffs may not prevail. The claims in the Action involve numerous complex legal and factual issues, many of which would require extensive and costly expert testimony. The Parties disagree on both liability and damages and do not agree on the average amount of damages per share, if any, that would be recoverable if Plaintiffs were to have prevailed on each claim alleged. Among the many key issues about which Lead Plaintiffs and the Defendant do not agree are: (1) whether the Defendant is a successor to Stonefield Josephson, Inc.; (2) whether the Defendant violated the securities laws or otherwise engaged in any wrongdoing; (3) whether the misrepresentations and omissions alleged by the Lead Plaintiffs were material, false, misleading or otherwise actionable under the securities laws; (4) the extent (if any) that the alleged misrepresentations and omissions influenced the trading prices of Fuqi common stock during the relevant period; and (5) the method for determining whether, and the extent to which, purchasers of Fuqi stock suffered injury and damages that could be recovered at trial.

Statement of the Parties’ Position on Damages: The parties do not agree on the average amount of damages per share that would be recoverable if Plaintiffs were to prevail in the Action. The parties disagree on, among other things: (a) the amount of inflation, if any, allegedly caused by the alleged misrepresentations and omissions; (b) to what extent Class Members’ losses were caused by the alleged misconduct; and (c) whether Defendant made a materially false statement or had any intent to make one.

Attorneys’ Fees and Expenses: Neither Lead Counsel for Plaintiffs, nor Plaintiffs’ Additional Counsel have received any payment for their work or reimbursement for expenses incurred in investigating the facts, conducting this litigation and negotiating the Settlement on behalf of the Lead Plaintiff and the Class. Lead Counsel will ask the Court for attorneys’ fees not to exceed one-third of the Settlement Fund and expenses not to exceed $100,000.00 to be paid from the Settlement Fund.

If the above amounts are requested and approved by the Court, the average cost per share of common stock (based on all eligible Class Members submitting valid claims) will be approximately $0.008 per share, making the estimated recovery per share after fees and expenses of approximately $0.025 for shares traceable to the Secondary Offering on July 22, 2009 and $0.010 for those who do not have such claims. The only additional expenses charged against the Net Settlement Fund will be the costs of administration of settlement by the Claims Administrator and any Lead Plaintiff awards.

Dismissal and Releases: If the proposed Settlement is approved, the Court will enter a Final Judgment and Order of Dismissal with Prejudice (the “Judgment”). The Judgment will dismiss the Released Claims with prejudice as to the Released Persons, which include the Defendant, its past, present and future partners, limited liability partners, members, directors, officers, employees, shareholders, present and former attorneys, consultants, financial or investment advisors, commercial bankers, underwriters, banks or investment banks, advisors, engineers, principals or agents (including, without limitation, those acting on behalf of or at the direction of Defendant), personal or legal representatives, insurers, reinsurers, predecessors, successors, parent entities, affiliates, subsidiaries, divisions, assigns, any partnership in which Defendant is a general or limited partner, any entity in which Defendant has a controlling interest, any member of the immediate family of any partner, limited liability partner or member, or any trust or foundation of which Defendant is the settlor. Insurers providing insurance coverage to Defendant and present and former partners, limited liability partners or members of Defendant, are expressly included in the definition of Released Persons. The Judgment will provide that all Class Members shall be deemed to have released and forever discharged all Released Claims (to the extent Class Members have such claims) against all Released Persons. The terms of the releases, including the meaning of the term “Released Claims,” are set forth in the Proof of Claim and Release form.

YOUR LEGAL RIGHTS AND OPTIONS IN THE SETTLEMENT
SUBMIT A CLAIM	The only way to receive a payment – unless you previously submitted a claim in connection with the Fuqi Litigation.
OBJECT	You may write to the Court if you do not like this Settlement.
EXCLUDE YOURSELF	Receive no payment. This is the only option that allows you to participate in another lawsuit against the Defendant relating to the Class claims being released in this case.
GO TO A HEARING	You may ask to speak in Court about the fairness of the Settlement.
DO NOTHING	Receive no payment – unless you previously submitted a claim in connection with the Fuqi Litigation.

Unless you timely request exclusion from the Class, or unless the Court rejects the proposed Settlement, you are bound by the Settlement Agreement and its Release, whether or not you submit a claim.

These rights and options – and the deadlines to exercise them – are explained in the Notice.

The Court presiding over this case must decide whether to approve the Settlement. Payments will be made only if the Court approves the Settlement and, if there are any appeals, after appeals are resolved. Please be patient.

FOR MORE INFORMATION PLEASE CONTACT THE SETTLEMENT ADMINISTRATOR AT 877-351-0335 or fuqi@angeiongroup.com. PLEASE DO NOT CONTACT THE COURT.