China Securities Regulatory Commission announced 20 typical illegal cases: Yihua Life, Guangzhou Longqi were named

2022-05-27 0 By

China Securities Regulatory Commission (CSRC) announced that the SECURITIES regulatory Commission will investigate 20 typical illegal cases in 2021, among which yihua Life, Guangzhou Longqi and other companies were named.I. Yihua Life Information disclosure violation case.This case is a typical case in which the actual controller instigated the financial fraud of the listed company.From 2016 to 2019, the actual controller of Yihua Life Technology Co., LTD. (referred to as Yihua Life) took advantage of his controlling position and instructed the listed company to artificially increase its income by 7.1 billion yuan and profit by 2.8 billion yuan through fictitious sales business.This case shows that the regulatory authorities continue to severely crack down on financial fraud in the capital market and other credit violations, and seriously investigate major shareholders, actual controllers and listed companies and their directors, supervisors, and senior managers for their illegal liabilities.Ii. Guangzhou Langqi Information Disclosure violation case.This case is a typical case of systematic financial fraud.From January 2018 to December 2019, Lonkey Industrial Co.,Ltd.Guangzhou(hereinafter referred to as Guangzhou Langqi) falsely increased its income by 12.9 billion yuan and its assets by 2 billion yuan by means of fictitious commodity trade and inflated inventory.This case warns that listed companies should operate in good faith in accordance with the law and truthfully disclose business results and financial conditions to investors, and fraud will inevitably pay a heavy price.Third, nianfu Supply chain and Ningbo Dongli Information disclosure violations.This case is a typical case of financial fraud in fictitious supply chain business.In 2017 Ningbo Donly Co.,Ltd.(Ningbo Dongli) completed the acquisition of Shenzhen Nianfu Supply Chain Co.,Ltd.(Nianfu Supply Chain).From July 2014 to March 2018, the annual rich supply chain inflated its revenue by 3.5 billion yuan and its profit by 400 million yuan by falsely increasing export agency service fees and fictitious overseas agency purchases.This case shows that the use of new business, new mode to implement financial fraud, in violation of material assets restructuring rules and listed companies information disclosure system, is always the focus of the crackdown by the regulatory authorities.Iv. Longli Biological information disclosure violation case.This case is a typical case of a listed company directly deleting accounting information to implement financial fraud.From 2015 to 2017, Shandong Longlive Bio-Technology Co.,Ltd.(hereinafter referred to as Longli Bio) deleted and altered financial data, forged accounting vouchers and other methods, resulting in the inflated assets of nearly 500 million yuan, the inflated liabilities of more than 1.7 billion yuan and the inflated profits of nearly 140 million yuan in 2015.In 2016, the inflated assets were nearly 130 million yuan, the inflated liabilities were more than 2.8 billion yuan, and the inflated profits were nearly 250 million yuan.In the half year of 2017, the liabilities were reduced by 2.9 billion yuan, and the profits were increased by nearly 200 million yuan.This case suggests that listed companies should strictly follow the enterprise accounting system and standards and the requirements of the Securities Law, conduct accounting and fulfill information disclosure obligations in accordance with laws and regulations.V. Violation of laws and regulations on information disclosure of Asia-pacific Pharmaceutical.This case is a listed company subsidiary financial fraud typical case.From 2016 to 2018, Shanghai Xingaofeng Biomedical Co.,Ltd., a wholly-owned subsidiary acquired by Zhejiang Yatai Pharmaceutical Co.,Ltd.(referred to as “Asia-Pacific Pharmaceutical”), fabricated business transactions, resulting in an accumulated false revenue of more than 400 million yuan and a false profit of nearly 200 million yuan.This case suggests that the authenticity, accuracy and completeness of financial information of subsidiaries is an important basis for the overall quality of information disclosure of listed companies. Listed companies should strengthen standardized management of subsidiaries and urge them to operate in compliance with laws and regulations.Vi. Case of Fraudulent issuance of Blue Mountain Technology and failure of relevant intermediary agencies to fulfill their duties diligently.This case is a typical case of fraudulent issuance of new Third Board companies.From 2017 to 2019, Beijing Blue Mountain Science and Technology Co., LTD. (blue Mountain Science and Technology for short) falsely increased its revenue by more than 800 million yuan, its R&D expenditure by more than 200 million yuan and its profit by more than 80 million yuan through the fictitious purchase and sales business and R&D business, resulting in false records in its public offering documents.Hualong Securities Co., LTD., ZHONGxing Caiguanghua Accounting Firm, Beijing Tianyuan Law Firm and New Century Asset Appraisal Co., Ltd. provided relevant securities services for Blue Mountain Science and Technology, but failed to check prudently according to business rules and issued reports with false records.This case warns that THE NEEQ companies should respect the market rules and not “rush through problems”. Relevant intermediary agencies should perform their duties diligently and jointly maintain the healthy development of the NEEQ market.Vii. Illegal case of Information disclosure of Cody Dairy.This case is a typical case in which the controlling shareholder of a listed company encroaches on the interests of the company.From 2016 to 2019, the controlling shareholders of Henan Kedi Dairy Co.,Ltd.(Kedi For short) and their related parties illegally occupied the funds of listed companies of 800 million yuan, 2.5 billion yuan, 3.4 billion yuan and 6.8 billion yuan respectively without the internal decision-making procedures of listed companies, and controlled the listed companies to provide illegal guarantees of 500 million yuan in total.This case shows that the controlling shareholders and actual controllers of listed companies have committed illegal acts such as appropriation of funds and illegal guarantee, which seriously infringed on the interests of listed companies and investors, and the regulatory authorities will investigate and punish them seriously.Eight, the pearl River is not diligent case.This case is typical of an audit institution’s inadequate implementation of audit procedures.In the process of providing annual report audit services for Kangmei Pharmaceutical Co., LTD., Guangdong Zhongzhong Pearl Certified Public Accountants (zhongzhong Pearl Certified Public Accountants for short) made some wrong conclusions in the risk identification and evaluation stage, failed to strictly implement audit plans such as measures to deal with fraud risks, and committed other behaviors that were not diligent and responsible.Internal personnel even cooperate with listed companies to intercept confirmation letters and take forged interview records as audit evidence, and there are false records in the audit report issued.This case warns that audit institutions should maintain professional skepticism, strictly follow the requirements of audit standards to carry out audit procedures, not “go through the motions” audit.Ix. Ruihua’s failure to fulfill his duties with diligence.This case is a typical case that the intermediary agencies repeatedly investigate and repeatedly commit.In 2021, Ruihua Accounting firm (referred to as Ruihua) in Hunan China Sun Pharmaceutical Machinery Co.,Ltd., Shenzhen Soling Industrial Co.,Ltd., Yan ‘an Bikang Pharmaceutical Co.,Ltd. and other annual report audit projects, due to the existence of risk assessment procedures, internal control testing procedures, substantive audit procedures are not in place and other problems have been administrative penalties,A total of more than 16 million yuan was confiscated.The case shows that the regulatory authorities have always been closely watching the intermediary agencies that failed to fulfill their duties and were repeatedly involved in illegal activities, and have been strictly investigated for legal responsibility in accordance with the law.X. Haitong Securities failed to fulfill its duties diligently.This case is typical of a financial adviser failing to effectively fulfil his continuing supervision obligations.Haitong Securities Co., LTD. (referred to as Haitong Securities) did not pay sufficient attention to listed companies’ external guarantee and private lending, and did not fully check and verify relevant matters in the continuous supervision work of Aolide Photoelectric Co., LTD in 2017. The report issued by Haitong Securities had false records.This case suggests that financial consultants should earnestly fulfill the responsibility of continuous supervision and urge listed companies to standardize their operations.Xi. Illegal case of Bond information disclosure of Brilliance Group.This case is a typical case of fraudulent issuance in bond market.From 2017 to 2018, Brilliance Automobile Group Holding Co., LTD. (Brilliance Group) inflated the net profit attributable to the owner of the parent company by way of confirming the equity transfer income in advance, and recorded the false financial data in the declaration materials for the public issuance of corporate bonds.This case shows that the bond issuer defrauded the bond issuance qualification by fabricating false financial data, which seriously damaged the credit basis of the bond market and must be seriously investigated and punished.Xii. Illegal case of Yongmei Holding Bond Information Disclosure.This case is a classic case of a bond issuer making false statements.Yongcheng Coal power Holding Group Co., LTD. (referred to as Yongcheng Coal Holding) did not truthfully disclose the situation of the controlling shareholders of the capital collection, and accumulated a false monetary fund of 86.1 billion yuan.This case suggests that bond issuers should truthfully disclose important information and not disguise their actual solvency to harm the interests of bond holders.Xiii. Violations of bond information Disclosure of Shengtong Group.This case is a typical case of bond issuer financial fraud.From 2013 to 2017, Shandong Shengtong Group Co., LTD. (shengtong Group for short) falsely increased its revenue by 61.5 billion yuan and its profit by 11.9 billion yuan by fabricating its purchase and sale business and preparing false financial account sets.This case shows that the regulatory authorities rely on the bond market unified law enforcement work mechanism, resolutely maintain the fairness and order of the bond market, for the implementation of systematic financial fraud, disclosure of false information and other illegal acts, will be thoroughly investigated and severely punished in accordance with the law.14. Chen and others manipulated the stock price of Zhongchang Data.This case is a typical case in which the actual controller of a listed company colludes inside and outside to manipulate the company’s stock price.From February 2018 to January 2019, Chen, the actual controller of Zhongchang Big Data Co., LTD. (hereinafter referred to as Zhongchang Data), instructed General Manager Xie and market trader Hu to control and use 101 securities accounts to manipulate the stock price of Zhongchang Data by means of continuous trading and inverted trading, making illegal profits of 11.47 million yuan.This case warns that listed companies and their actual controllers should enhance corporate value according to law and comply with the law, and adhere to the “four bottom lines” of not engaging in insider trading, not disclosing false information, not manipulating stock prices, and not harming the interests of listed companies.15. Li mou and others manipulated “Jin Yi Film” stock price case.This case is a typical case of market manipulation and illegal crime jointly investigated by securities regulatory authorities and public security organs.In 2019, Li and others used about 900 million yuan to manipulate the stock price of Jinyi Film and Television, making illegal profits of more than 100 million yuan.In 2021, 35 people involved in the case, including traders and capital distribution agencies, were investigated for criminal responsibility.This case shows that the securities regulatory authorities and public security organs have always adhered to the “zero tolerance” policy, effectively strengthened law enforcement cooperation, and continued to maintain the full chain, all-round, three-dimensional accountability for market manipulation.16. Huang and others manipulated the price case of “fiberboard 1910 contract”.This case is a typical case of using information advantage to manipulate futures contract prices.From September to October 2019, huang, the futures specialist of a designated delivery warehouse of fiberboard in a futures exchange, used the key information of the deliverable warehouse receipt of the “fiberboard 1910 contract” to manipulate the price of the “fiberboard 1910 contract” together with others, making an illegal profit of 2.31 million yuan.This case warns that futures market practitioners should adhere to professional ethics, do not use information advantage to illegally seek improper interests.17. Middle Range Leasing Insider Trading *ST Xinhai Stock case.This case is a typical case of using inside information to avoid investment losses.In April 2019, zhongcheng Leasing Co., LTD. (hereinafter referred to as Zhongcheng Leasing) then chairman learned that the listed company Xinhaiyi Technology Group Co., LTD. (hereinafter referred to as *ST New Sea) in 2018 will be a substantial loss of insider information, zhongcheng leasing held 15.36 million shares of *ST New Sea shares sold, to avoid losses of 67.97 million yuan.The case shows that insider trading seriously undermines the fair trading order of the capital market and damages investors’ confidence, and the regulatory authorities are determined to severely investigate and punish insider trading in accordance with the law.18, Yang and others insider trading lu Shang real estate stock case.This case is a listed company merger and reorganization link insider trading nest case.From September to December 2018, Lushang Real Estate Co., LTD. (hereinafter referred to as Lushang Real Estate) planned to acquire the equity of Shandong Furuda Pharmaceutical Group Co., LTD.Before the disclosure of inside information, insiders of the merger and reorganization participants, their colleagues, customers, friends and relatives, neighbors and other insiders traded the stocks of Lusang Real Estate, resulting in 10 persons being punished by administrative penalties.This case suggests that listed companies should strengthen the management of insider information in the process of merger and reorganization, and insider information insiders should strengthen the sense of self-discipline to prevent and eliminate insider trading.Violations of laws and regulations in Guangzhou bedrock.This case is a typical case of serious breach of fiduciary duty by a private fund manager.From 2017 to 2020, Guangzhou Bedrock Asset Management Co., LTD. (hereinafter referred to as Guangzhou Bedrock) carried out a number of illegal acts including falsely increasing fund assets, misappropriating fund assets and promising minimum returns.This case warns that private fund managers should uphold the concept of “entrusted by others and loyal to others”, operate in accordance with the law and not commit illegal acts such as cheating clients.20. Zhu refused and obstructed the investigation.This case is a typical case of litigants against securities law enforcement.In June 2020, zhu mou, then chairman of Hangzhou Zhongheng Electric Co., Ltd., refused to answer the phone for many times, refused to receive legal documents and other ways to resist the INVESTIGATION of CSRC law enforcement officers, and was eventually fined 200,000 yuan.The case shows that it is the legal power of regulatory authorities to investigate securities violations in accordance with the law, and the units and individuals under investigation should cooperate in accordance with the law and should not refuse, obstruct or conceal.Editor/Fan Hongwei