This newspaper (chinatimesnet.CN) reporters Shuai Kecong and Ye Qing report from Beijing.
Due to the false records in the prospectus and annual reports of each period, Beijing Huichen Zidao Information Co., Ltd., which has only been listed for more than three years, is hereinafter referred to as "Huichen Shares", 688500SH) was fined, which became another typical case of financial fraud in the A** field.
On the evening of December 22, Huichen announced that it received an administrative penalty decision issued by the Beijing Securities Regulatory Bureau, and the company and the chairman, the financial person in charge and other four responsible persons were fined a total of 16 million yuan, of which the company was fined 5 million yuan, and the chairman Zhao Long was fined 3 million yuan.
Huichen shares said that the judgment of this illegal act did not touch the major illegal forced delisting stipulated in the listing rules of the Science and Technology Innovation Board, and the company's production and operation are normal, and I sincerely apologize to the majority of investors.
Zang Xiaoli, a lawyer at Beijing Shixue Law Firm, said in an interview with a reporter from the China Times that Huichen began to commit financial fraud from the first important legal document "Prospectus" announced to investors at the beginning of its listing, and this fraud continued until the 2022 annual report released at the end of April 2023, spanning 5 fiscal years. If investors suffer losses as a result, Huichen shares and relevant responsible parties shall be compensated in accordance with the law.
The fakes are staggering
According to public information, Huichen was established in 2008 and is a data analysis service provider. The company mainly provides enterprises and institutions with business operation analysis and application, customized industry analysis and application solutions based on internal and external data, consumer attitude and behavior data and industry data.
On July 16, 2020, Huichen shares were listed on the Science and Technology Innovation Board of the Shanghai ** Stock Exchange with an issue price of 3421 yuan, the total amount of funds raised is more than 600 million yuan, and the sponsor is CITIC**. As the first data analysis listed company to land on the Science and Technology Innovation Board, Huichen shares are also known as the "first stock of data analysis" on the Science and Technology Innovation Board.
However, just over three years after its listing, the company's risks have gradually become apparent. On April 27, 2023, the China Securities Regulatory Commission (CSRC) decided to file a case for investigation on suspicion of illegal information disclosure. Now the truth has been ascertained, shocking the market.
According to the Beijing Securities Regulatory Bureau, the main illegal facts of Huichen shares are: false records in the prospectus, false records in the 2020 annual report, false records in the 2021 annual report, and false records in the 2022 annual report. In other words, the company was fraudulent from the prospectus to all the annual reports after listing.
The fact of falsification mainly falls on Beijing Xintang Puhua Technology, a subsidiary of Huichen Co., Ltd., hereinafter referred to as "Xintang Puhua").
According to the announcement, in June 2017, Huichen Co., Ltd. acquired 48% of the equity of Xintang Puhua, and Xintang Puhua became a company in which Huichen Co., Ltd. participated. In December 2020, Huichen Co., Ltd. further acquired 22% of the equity of Xintang Puhua, and Xintang Puhua became a holding subsidiary of Huichen Co., Ltd. Xintang Puhua falsely increased its revenue and profits by fictitious business with third parties, signing sales contracts without commercial substance, and recognizing project income in advance, resulting in false records in the prospectus and annual reports of Huichen shares.
Lawyer Zang Xiaoli, who is concerned about the case, told the China Times: "In December 2020, when Huichen further acquired a 22% stake in Xintang Puhua, the transaction consideration was about RMB 56.76 million. However, on February 7, 2023, Huichen decided to sell 22% of Xintang Puhua's equity for 2.96 million yuan. Perhaps it was this wave of buying high and selling low equity that triggered regulatory intervention. ”
Judging from the details of the fraud, the announcement shows that the profits in 2018 and 2019 disclosed in the prospectus of Huichen shares were inflated by 555 respectively310,000 yuan, 1785880,000 yuan, accounting for the total disclosed profit in the current period. 16%。In 2020, Huichen shares inflated profits of 6096 in the first annual report of listing160,000 yuan, accounting for 60 percent of the total disclosed profit for the current period69%。In 2021 and 2022, in the case of the company's losses, the profits will be inflated by 1721190,000 yuan, 10496200,000 yuan.
Regulatory penalties are heavy
Fictitious business, signing false contracts, and recognizing project revenue in advance are all common means of financial fraud, and the nature of fictitious business is very bad. A senior financial person told reporters.
The reporter noticed that Huichen shares in the first annual report of the listing of the proportion of inflated profits as high as 60%, such an astonishing situation, but also directly affect the regulatory penalties.
According to the Beijing Securities Regulatory Bureau, the above-mentioned illegal facts are proved by evidence such as the announcement of the listed company, relevant contracts, financial information, inquiry records, WeChat chat records, bank account information, and materials provided by relevant parties, which are sufficient to determine. Considering that there are false records in the issuance documents of Huichen shares, and the proportion of false records in individual years is relatively large, the penalty range is determined in accordance with the above circumstances.
The Beijing Securities Regulatory Bureau decided to order Huichen shares to make corrections and impose a fine of 5 million yuanZhao Long, then chairman and general manager of Huichen Co., Ltd., was fined 3 million yuanHe Kanchen, then general manager of Xintang Puhua and deputy general manager of Huichen Co., Ltd., was fined 3 million yuanXu Jingwu, then the financial director and secretary of the board of directors of Huichen Co., Ltd., was fined 2.5 million yuanMa Liang, then director of Huichen Co., Ltd. and director of Xintang Puhua, was fined 2.5 million yuan. At the same time, warnings were given.
Not only that, the Beijing Securities Regulatory Bureau also decided to take administrative supervision measures of issuing warning letters to more than ten other directors, supervisors and senior managers of Huichen shares, and recorded them in the best market integrity file.
In addition, on December 22, 2023, the Shanghai Stock Exchange made a disciplinary decision to publicly reprimand Huichen Shares, Zhao Long, He Kanchen, Xu Jingwu, and Ma Liang. At the same time, more than 10 other directors, supervisors and senior executives of the company were given regulatory warnings.
It is worth noting that the disciplinary decision issued by the Shanghai Stock Exchange shows that Huichen shares and relevant responsible persons raised objections within the specified time limit, saying that during the period when Xintang Puhua was a shareholding subsidiary of the company, it had independent decision-making power and operational autonomy in terms of business development and personnel management, and the company did not participate in the specific implementation. After discovering that there were major business risks in Xintang Puhua, the company has actually carried out rectification work.
However, the Shanghai Stock Exchange said that the facts of Huichen's violations were clear and the nature was vile. The reasons claimed by the company and the responsible person for having implemented management, not participating in the operation of the shareholding company, and relying on intermediaries do not affect the establishment of the facts of the violation, and the reasons such as the alleged rectification have failed to mitigate the adverse impact of the violation. The relevant responsible person's claim that there is no subjective intent, no knowledge, or that they have performed their duties and other reasons cannot be established, and it does not constitute a mitigating or mitigating circumstance of liability for violations.
Regarding the impact of this incident, the "China Times" reporter called Huichen shares several times on December 23 to seek comment, but ** was not answered. However, the company said in the announcement that it judged that the illegal act did not touch the situation of major illegal forced delisting, and expressed sincere apologies to the majority of investors. The company will learn from the lessons learned, improve the quality of information disclosure, and safeguard the interests of the company and its shareholders.
Who is responsible for the loss of shareholders
Huichen shares are another typical case of financial fraud on the Science and Technology Innovation Board. Not long ago, at the end of October, Roput (688619SH), also received a total of 16 million yuan in fines, of which the company was fined 4 million yuan, and 9 responsible persons were fined a total of 12 million yuan. Earlier, there was also Zeda Yisheng (688555SH), Amethystum Storage (688086sh）。
The stock price trend of Huichen shares can be described as "the peak on the first day of listing". **According to the data, on July 16, 2020, the share price of Huichen shares on the first day of listing once exceeded 120 yuan (before the resumption), but since then, it has fallen to around 14 yuan in June 2023.
As of December 22**, Huichen shares reported 2522 yuan shares, with a market value of only about 18700 million yuan, a decrease of about 80% from the high point on the first day of listing, and the latest number of shareholders is about 3,500.
Lawyer Zang Xiaoli pointed out that the Beijing Securities Regulatory Bureau imposed a fine of 5 million yuan on Huichen shares based on the information disclosure violation in Article 197 of the new ** Law, rather than the fraudulent issuance clause in Article 181, and the regulator may have taken into account the proportion and amount of financial fraud in the listing stage.
However, Zang Xiaoli also said that the administrative fine is only one of the consequences of financial fraud of listed companies, and it is not the whole story. If investors suffer losses, they can sue for compensation, and Huichen shares and relevant responsible parties shall be compensated in accordance with the law. It is preliminarily determined that from the date of listing to April 27, 2023, the injured persons who sell or continue to hold shares on or after April 28, 2023 are expected to be compensated.
It is worth mentioning that the audit institution of Huichen shares is PricewaterhouseCoopers Zhongtian Certified Public Accountants, on April 28, 2023, the day after Huichen shares were investigated by the Securities Regulatory Commission, the accounting firm issued an audit report on the financial statements of Huichen shares in 2022 that could not express an opinion, and led to the delisting risk warning of Huichen shares to this day, ** abbreviation changed to "*ST Huichen". However, before the CSRC opened an investigation, PwC issued an audit report with a standard unqualified opinion.
Editor-in-charge: Ma Xiaochao Editor-in-chief: Xia Shencha.