In response to the buyout offer by Harbin Electric Chief Executive Tianfu Yang and a fund advised by Baring Private Equity Asia Group Ltd., to take over Harbin Electric, Inc at $24 per share an investigation on behalf of investors of Harbin Electric, Inc. (NASDAQ:HRBN) over possible breaches of fiduciary duties was announced.

The investigation by a law firm concern whether Harbin Electric Chief Executive Tianfu Yang, the fund advised by Baring Private Equity Asia Group Ltd, Harbin Electric, Inc. ,and its Board breached their fiduciary duties owed to Harbin Electric, Inc. (Public, NASDAQ:HRBN) investors in connection with the proposed takeover.

On Monday, October 11, 2010, Harbin Electric Inc. announced that its Board of Directors has received a proposal letter from Harbin Electric Chairman and Chief Executive Tianfu Yang and a fund advised by Baring Private Equity Asia Group Ltd. to acquire all of the outstanding shares of Harbin Electric, Inc. (NASDAQ:HRBN) they don't already own for $24 each. Harbin Electric Inc. said Tianfu Yang owns 31.1% of the stock, the company said in a Monday statement. In the past year, Harbin Electric stock has traded as high as $26 and as low as $15.26. Harbin said the board formed a panel of independent directors to evaluate the proposal

But the investigation by the law firms concern whether a sale process and the offered price are unfair to the shareholders of Harbin Electric, Inc. (NASDAQ:HRBN).

Shares of Harbin Electric, Inc. (Public, NASDAQ:HRBN), which traded before the announcement at almost $20 per share, increased in response to the takeover news in pre-market to $25.08 per share or by 25%. HRBN shares traded as recently as April and January over $24 per share. In addition Harbin Electrics 12 month revenue went from $40.42million in 2006 to $223.23million in 2009. Therefore the investigation concerns whether the Harbin Electric, Inc. Chairman and Chief Executive Tianfu Yang or the Board of Directors undertake an adequate and fair sales process to obtain fair consideration for all shareholders of Harbin Electric, Inc. (NASDAQ:HRBN) and breach their fiduciary duties to Harbin Electric, Inc. (Public, NASDAQ:HRBN) shareholder by failing to adequately shop the Company before entering into the proposed transaction with Chairman and Chief Executive Tianfu Yang and a fund advised by Baring Private Equity Asia Group Ltd.