China News Service, May 9th, according to the official website of the China Securities Regulatory Commission, the China Securities Regulatory Commission announced on May 9 the 20 typical violation cases of the China Securities Regulatory Commission, including Zhongan Consumers ’Backdoor Fraud and Yinxin ’s failure to perform due diligence, Fushun Special Steel Cases of fraud, cases of illegal information disclosure, etc. The following are 20 cases:
20 typical illegal cases in 2019
1. Zhongan Consumers' backdoor fraud and Yinxin's failure to perform due diligence (Administrative Punishment Decision [2019] No. 40, No. 44-46). This case is a typical case of merger and acquisition fraud and trust violation during a major asset reorganization of a listed company. Zhongan Consumer Technology Co., Ltd. (abbreviated as Zhongan Consumer) arbitrarily increased assets during the backdoor listing of Zhonganke Co., Ltd. and arbitrarily increased operating income of 55.15 million yuan. Shanghai Yinxin Asset Appraisal Co., Ltd. did not pay enough attention to the appraisal assets, and the earnings forecast and appraisal value increased seriously. The case shows that parties involved in the reorganization of listed companies and intermediaries must bear corresponding legal responsibilities for frauds in major asset reorganizations.
2. Fushun Special Steel's financial fraud case (Administrative Punishment Decisions [2019] No. 147 and No. 33). This case is a typical case of long-term systematic fraud of a state-owned listed company. From 2010 to September 2017, Fushun Special Steel Co., Ltd. (referred to as Fushun Special Steel) abused the characteristics of special steel raw materials and cast furnace scraps as ordinary steel raw materials, forged the "return steel" storage certificate, and increased the stocks and profits. About 1.9 billion yuan. In May 2019, Fushun Special Steel failed to disclose the 2017 annual report and the 2018 quarterly report as scheduled. The case shows that the CSRC will continue to increase its efforts to crack down on various types of information disclosure violations, urge listed companies to strictly perform various information disclosure obligations in accordance with the law, promote the standardized operation of listed companies, and promote the continuous improvement of the quality of listed companies.
3. Baoqianli Information Disclosure Law and Regulation (Administrative Punishment Decision [2019] No. 141). This case is a typical case where a listed company was repeatedly punished for false statements. In August 2017, Jiangsu Baoqianli Video Technology Group Co., Ltd. (abbreviated as Baoqianli) was subject to administrative penalties for the inflated valuation of assets. In December 2019, Bao Qianli was again subject to administrative penalties for failing to disclose related transactions involving 3.4 billion yuan in sales revenue and 700 million yuan in loan guarantees. The investigation and punishment in this case show that the supervisory department will pay close attention to and seriously investigate and punish acts that repeatedly violate the order of information disclosure.
4. Beautiful ecological information disclosure violation of laws and regulations and New Age Securities' diligence due diligence. (Administrative Penalty Decision [2019] No. 69). This case is a typical case of reorganization with false profit forecast information. In 2015, Shenzhen Meili Ecological Co., Ltd. (abbreviated as Meili Eco) did not faithfully describe the progress of the Jinsha Lake Project and the Guantang Project in the major reorganization document for the acquisition of 100% equity of Jiangsu Bada Garden Co., Ltd. The income forecast is unrealistic, and some of the terminated framework agreements are disclosed as signed agreements; New Times Securities, as the independent financial advisor for the above projects, issued reports with misleading statements and related verification opinions. This case shows that the truthfulness, accuracy and completeness of the merger and reorganization of financial information of listed companies is an important basis for the functioning of the market. Large shareholders, actual controllers, directors, supervisors, senior managers and intermediaries must perform their legal obligations in accordance with the law and effectively improve information Disclosure quality.
5. Infront Microfinance fraud case (Administrative Penalty Decision [2019] No. 114). This case is a typical case where a listed company uses overseas business to carry out financial fraud. Infront Microelectronics Co., Ltd. (referred to as Infront Micro) referred to its overseas data center business, recognized revenues when it did not have business development conditions and could not provide contractually agreed services, and inflated its 2015 profit by more than 23 million yuan. The investigation and prosecution in this case indicated that the CSRC will continue to strengthen cross-border regulatory cooperation, severely crack down on the use of overseas business to disguise financial fraud and evade regulatory investigations, and strengthen the seriousness of information disclosure.
6. Tianxiang Environmental Information Disclosure Law and Regulation (Sichuan Securities Regulatory Bureau Administrative Penalty Decision [2019] No. 2). This case is a typical case where the actual controller illegally takes up huge amounts of funds of a listed company. From January to July 2018, Deng Qinhua, the actual controller of Chengdu Tianxiang Environment Co., Ltd. (referred to as Tianxiang Environment), signed a false procurement contract, borrowed money, and borrowed through private bridges. The non-operating occupation of Tianxiang Environmental Fund was 2.09 billion yuan. Disclosure. The case shows that the major shareholders and actual controllers of listed companies ignore the rights of small and medium shareholders and damage the interests of listed companies through capital occupation and illegal guarantees, which will be severely punished.
7. Haiyin Information Disclosure Law and Regulation (Guangdong Securities Regulatory Bureau Administrative Penalty Decision [2019] No. 9). This case is a typical case of a misleading statement in the information disclosure of a listed company. On June 12, 2019, Guangdong Haiyin Group Co., Ltd. (abbreviated as Haiyin Co., Ltd.) disclosed the industrial operation of "Jinzhu Polysaccharide Injection" for the prevention and control of African swine fever. After investigation, the company disclosed the effectiveness of prevention, patented technology and performance prediction, which lacked basis, and there were false records and misleading statements. The case shows that the hot spots and speculation of listed companies seriously undermine the seriousness of the information disclosure system and seriously mislead investors, and should be punished according to law.
8. New Green shares financial fraud case (Administrative Penalty Decision [2019] No. 55). This case is a typical case where the New Third Board Company committed continuous fraud on gambling in order to fulfill its pre-listing performance. Shandong New Green Food Co., Ltd. (abbreviated as New Green Co., Ltd.), from 2013 to 2015, set up off-account accounts and invoiced invoices. It organized financial fraud, accumulating 930 million yuan in revenue and 140 million yuan in profits. This case shows that performance that exceeds corporate profitability is not only easy to form an asset bubble for gambling, but may also trigger fraudulent motives. Public companies should be highly vigilant when participating in market activities.
Nine, Zhonghua Certified Public Accountants failed to do their due diligence (Administrative Punishment Decision [2019] No. 110). This case is a typical case in which the audit agency failed to pay sufficient attention to important matters and was punished. In 2015, Zhonghua Certified Public Accountants (referred to as Zhonghua Institute) did not give necessary attention to matters such as the fictitious financial subsidies of Shenglaida in the process of providing audit services for Ningbo Shenglaida Electric Co., Ltd. (administrative punishment in 2018). , The audit report issued has false records. In May 2019, during the process of providing audit services for Jiangsu Yabate Technology Co., Ltd. (administrative punishment in 2017), Zhonghua was punished for administrative failure to carefully check the authenticity of the project. The case shows that intermediaries should play a good role as "gatekeepers", perform their duties diligently, and provide investors with authentic and credible assurance opinions. The regulatory department will highlight the role of strengthening the inspection and verification of intermediary institutions and professional checkpoints, effectively improve the service level of intermediary institutions, and protect the legitimate rights and interests of investors.
10. Debon Securities failed to make due diligence (Administrative Penalty Decision [2019] No. 121). This case is a typical case where the lead underwriter did not fully perform the verification procedures. In July 2015, Debon Securities Co., Ltd. (abbreviated as Debon Securities), as the lead underwriter of bonds of Wuyang Construction Group Co., Ltd. (referred to as Wuyang Construction, was punished in 2018), did not fully verify the authenticity of the raised documents , The risk of recovery of accounts receivable and the situation of investment real estate have not fully fulfilled the verification procedures. The investigation and punishment of this case in accordance with the law have a positive significance for promoting the security institutions and their employees to perform their duties and diligently in the bond market business activities and better protect the legitimate rights and interests of bondholders.
11. The case of Luo Dongshan et al.'S market manipulation (Criminal Judgment [2019] Zhejiang 07 Penchu No. 40). This case is a major typical case of market manipulation jointly conducted by the Securities Regulatory Commission and public security organs in recent years. From 2016 to 2018, the Luoshan group and the off-site distribution intermediary Gong Shiwei and others conspired to manipulate 8 stocks, such as Dibei Electric, and made a profit of more than 400 million yuan. In July 2018, 43 main members of the gang were arrested and brought to justice by public security organs. In December 2019, the Intermediate People's Court of Jinhua City, Zhejiang Province issued a guilty verdict against 31 persons in accordance with law. The CSRC will further optimize the collaboration between administrative and criminal law enforcement, give full play to the joint efforts of supervision, and jointly crack down on securities and futures crimes.
Twelve, Wu Moumou gang manipulation market case. This case is a major typical case of cross-border market manipulation by the "black mouth" of the stock market. In 2016, a gang of Wu used overseas web servers such as Singapore to open multiple websites to recommend "after-market tickets." The gang bought a large number of related stocks in advance through private equity institutions and over-the-counter funding, inducing retail investors to buy and sell at the same time. Profit. In March 2019, the main members of the gang were arrested and brought to justice by public security organs. The "black mouth" of the stock market seriously disrupts the order of information dissemination and the principle of fair trading. It is a key area of supervision and law enforcement. The CSRC strictly investigates and deals with various manipulations and promotes the market to adhere to the concept of value investment.
13. Zhao Jian's market manipulation case (Administrative Punishment Decision [2019] No. 128). This case is a typical case where the actual controller misuses the information advantage to manipulate the stock price of the listed company. From 2015 to 2018, Zhao Jian, the chairman and actual controller of Zhejiang Jinlihua Electric Co., Ltd. (abbreviated as Jinli Huadian), colluded with the company's original financial director Lou Jinping and the funding agency Zhu Panfeng to plan and implement major asset restructuring and equity During the transfer process, the timing of stock suspension was artificially controlled, and the stock price was manipulated. The investigation and prosecution in this case showed that the manipulation of stock prices in the name of "market value management" seriously violated securities laws and regulations, and major shareholders, actual controllers and relevant parties of market institutions should stay away from "pseudo-market value management."
14. Lu Lei et al.'S market manipulation case (Administrative Penalty Decision [2019] No. 125). This case is a typical case where a private equity fund manager uses a Shanghai-Hong Kong Stock Connect account to manipulate the market across borders. From December 2015 to July 2016, private equity fund manager Lu Le combined with others to use asset management accounts and Shanghai-Hong Kong Stock Connect accounts to cross-border manipulate 3 stocks such as "Fida Environmental Protection", with a total profit of more than 15 million yuan. Investigation and prosecution in this case indicated that the CSRC will strengthen law enforcement collaboration with overseas regulatory agencies, resolutely crack down on cross-border market manipulation and other illegal activities, and promote the smooth operation of the interconnected market mechanism.
15. Lin Jun ’s market manipulation case (Administrative Punishment Decision [2019] No. 149). This case is a typical case in which the actual controller of the listed company on the New Third Board manipulates the company's stock price at a high price to reduce holdings. From 2015 to 2016, the actual controller of Guangxi Mingli Innovation Industry Co., Ltd. (abbreviated as Mingli shares) Lin Jun organized several company executives to manipulate the company ’s stocks in order to reduce the number of shares subscribed for, which caused the illusion of active trading and attracted Investors and market makers follow up on purchases. Lin Jun and others reduced their shares of 73.29 million shares and made a profit of 290 million yuan. Manipulating stock prices undermines the pricing function of the New Third Board market and misleads investors in decision-making. It is a serious illegal act prohibited by securities laws and regulations. The supervision department strictly investigates and punishes all kinds of manipulations in the NEEQ market, and earnestly maintains the normal order of the NEEQ market.
16. Zhang Yuda and Zhang Xiaomin's market manipulation case (Administrative Punishment Decision [2019] No. 97). This case is a typical case in which the actual controller of the listed company of the New Third Board falsifies the information and manipulates the company's stock price. From 2016 to 2017, the actual controller of Pentium Technology Industrial Group Co., Ltd. (abbreviated as Pentium Group) Zhang Yuda and his spouse Zhang Xiaomin, through the company's cooperation with the release of false acquisition information, concentrated capital advantage, shareholding advantage and information advantage to manipulate the market. The investigation and punishment in this case showed that the SFC closely monitored all kinds of abnormal transactions in the entire market, and severely punished the behavior of maliciously manipulating the market once it was verified.
17. Sun Jiexiao et al. Insider Trading Case (Administrative Punishment Decision [2019] No. 19). This case is a typical case of insider trading of senior executives of a listed company during the merger and reorganization process. From June 2016 to February 2017, Suzhou Chunxing Precision Co., Ltd. (referred to as Chunxing Precision) was planning to acquire CALIENT Technologies, Inc. In the process, the company's chairman and actual controller Sun Jiexiao and director Zheng Haiyan and other inside information insiders used the inside information to illegally buy Chunxing Seiko shares for a total of 275 million yuan. The case shows that M & A and reorganization are still high-risk areas for insider trading, and the CSRC has always maintained a high pressure on law enforcement.
18. Yuan Zhimin and others insider trading case (Administrative Punishment Decision [2019] No. 63). This case is a typical case of insider trading of the actual controller of a listed company. Yuan Zhimin, chairman and actual controller of Jinfa Technology Co., Ltd. (hereinafter referred to as Jinfa Technology), jointly with others, illegally bought Jinfa Technology stocks for a total of 15 million yuan before the company disclosed the employee shareholding plan according to law. This case shows that major shareholders and actual controllers of listed companies should participate in corporate governance according to law, and promote companies to focus on their main businesses and stay away from illegal red lines such as insider trading.
19. Shanghai Xiyue's case of using undisclosed information (Administrative Punishment Decision [2019] No. 93). This case is a typical case of a private equity fund "mouse warehouse". After the collective decision of the investment committee of Shanghai Xiyue Investment Management Co., Ltd. (referred to as Shanghai Xiyue), from January to March 2015, the actual controller of Shanghai Xiyue Deng Eryong used the "Zhu Mouying" securities account and the company as a consultant. Xiyue No. 1 "asset management plan converged on transactions and made a profit of 4.95 million yuan. The case warns private equity fund managers and their practitioners to be trusted by others, to be highly self-disciplined, and to observe integrity and integrity.
20. Fengli Wealth Misappropriation of Fund Property Case (Administrative Penalty Decision [2019] No. 43). This case is a typical case of a private equity fund manager's breach of fiduciary duty. In September 2015, private equity fund manager Fengli Fortune (Beijing) International Capital Management Co., Ltd. (abbreviated as Fengli Fortune) issued a private placement product "Chang'an Fengli No. 24" which fell below the stop loss line. In order to resume the transaction, Fengli Wealth forged documents and seals and embezzled two other private placement products totaling 42.4 million yuan to replenish the capital of "Changan Fengli 24". The case shows that fund managers should treat the different fund products they manage fairly and protect the interests of holders, and private equity funds are no exception.