Recently, the Shenzhen Stock Exchange disclosed an administrative penalty case, dividing the relevant parties by the penalty of public criticism, of course, the relevant punishment is not only that. The issuer involved in this case is Sichuang Yihui Technology Co., Ltd. ***300078), the sponsor is CITIC**, the accountant is Tianjian, and the lawyer is Bank of China in Beijing. 
This case is a case of financial fraud by a listed company issuing convertible bonds for refinancing, which is somewhat different from the IPO financial fraud that we are generally concerned about, because the highest proportion of fraud is about 50%, which does not seem to have attracted much attention, and the convertible bonds were successfully issued, and the funds raised were in place. The Zhejiang Securities Regulatory Bureau imposed a fine of 10% of the funds raised by the issuer and a fine of 7.5 million yuan to the actual controller, which is nothing compared with the nearly 1 billion raised funds. The key is, should the issuer's fine be made to shareholders pay for it, or else should it be used to pay the fine with the funds raised by investors? In addition, the Zhejiang Provincial Securities Regulatory Bureau gave the chairman and the actual controller a 10-year ban on market "severe punishment", and other personnel were also notified and criticized. For the actual controller of the company, the market ban is just that he cannot be the chairman of the board, and does the other influence the boss to control and influence the company? To tell the truth, for financial practitioners or some grassroots managers, the market ban may be left and right, after all, it affects the problem of jobs. For these bigwigs in the capital market, what is the use of market ban? The issuer in this case was investigated on October 28, 2022, issued a prior notice of administrative penalty on September 25, 2023, and formally issued a penalty on January 8, 2024. According to the publicly disclosed information, the specific punishment results are as follows:1. China Securities Regulatory Commission (Zhejiang Securities Regulatory Bureau).ordered corrections, gave warnings, and imposed a fine of 85.7 million yuan (10% of the funds raised) on Sichuang Yihui Technology Co., Ltd.***; Zhang Lizhong was given a warning and fined 7.5 million yuan. A 10-year market ban was imposed on Zhang Lizhong. 2. ExchangesThe company was given a penalty of not accepting the issuance and listing application documents submitted by it for five years; Zhang Lizhong, then chairman and general manager of Sichuang Yihui Technology Co., Ltd., was publicly determined to be unsuitable for serving as a director, supervisor and senior manager of a listed company for ten years; The punishment of public reprimand was given to Sichuang Yihui Technology Co., Ltd.; Zhang Lizhong, then chairman and general manager of Sichuang Yihui Technology Co., Ltd., Wang Rin, then chief financial officer, Sun Xinjun, then vice chairman, deputy general manager and secretary of the board of directors, and Wang Jun, then chairman of the board of supervisors and employee supervisor, were publicly reprimanded. 
First, the development of Sichuang Medical Huigong
On July 5, 2020, Sichuang Yihui publicly disclosed the application draft of the "Prospectus for the Issuance of Convertible Corporate Bonds by the Growth Enterprise Market of Sichuang Yihui Technology Co., Ltd. to Unspecified Objects" (hereinafter referred to as the "Prospectus"). On October 22, 2020, the GEM Listing Committee of the Exchange held a meeting to review and approve the application for the issuance of convertible corporate bonds by Sichuang Yihui to unspecified targets. On December 16, 2020, Sichuang Yihui announced that its application for the issuance of convertible corporate bonds to unspecified targets had been approved by the China Securities Regulatory Commission for registration. On January 22, 2021, Sichuang Yihui publicly disclosed the "Prospectus", which contains the company's financial data from January to September 2017, 2018, 2019 and 2020. On February 1, 2021, Sichuang Yihui disclosed the "Announcement on the Issuance Results of Convertible Corporate Bonds to Unspecified Objects", stating that the scale of convertible bonds issued this time is 81,700000,000 yuan. [At that time, it was the first era of the registration-based reform, not to mention that the IPO was fast, and it was faster for a listed company to issue a convertible bond. Look at the rhythm of this issuer, declare in July, pass the meeting in October, get the registration approval in December, and raise funds in February. It took more than half a year to get 800 million yuan of real gold, which is really beautiful when you think about it. 】2. The public offering documents of Sichuang Yihui fabricated material false content
Sichuang Yihui carried out false business through its wholly-owned subsidiary, Yihui Technology, Hangzhou Wenran Information Technology, Hangzhou Wenran Information Technology, hereinafter referred to as Hangzhou Wenran, Shanghai Xifan Technology Services, Shenzhen Yulin Technology Services, and Shenzhen Yulin Technology Services, hereinafter referred to as Shenzhen Yulin), etc., with a cumulative inflated operating income of 34,929,35597 yuan, inflated profit of 33,021,67243 yuan, accounting for 20 of the total profit of the current period03%。Through its wholly-owned subsidiary, Yihui Technology, Hangzhou Wenran, Shanghai Xifan, Shenzhen Yulin, and Yixin Huitong (Beijing) Technology *** hereinafter referred to as Yixin Huitong) carried out false business, as well as confirmed in advance the revenue and cost of related businesses with Guangdong Huashang Software Technology *** formerly known as Guangzhou Huashang Software Technology *** and Henan Eton Medical Device Sales *** hereinafter referred to as Henan Eton), etc., and the cumulative inflated operating income from January to September 2020 was 60. 960,200.21 yuan, with a cumulative inflated cost of 6,288,11734 yuan, inflated profit of 52,370,66254 yuan, accounting for 56 of the total profit of the current period81%。[Although the public disclosure information does not describe in detail the specific path and method of fraud by listed companies through subsidiaries, there is nothing new in "carrying out false business" to carry out business fraud, let alone listed companies, there is no pressure and psychological burden on fraud, refinancing is so fast, as long as the funds are in place, any hole can be filled. In this case, the fraud rate in 2019 was 20%, and at the moment when the convertible bond application materials were locked in, the fraud rate was close to 60%, that is, more than half of the prospectus of the so-called legal documents that investors relied on to purchase convertible bonds that had undergone two reviews were false and empty. It is such a case of counterfeiting, which is only a fine, a notice of criticism and a ban on entering the market, without any criminal liability. I'm really still a little confused. 】3. There are false records in the 2019 and 2020 annual reports of Sichuang Yihui
Sichuang Yihui has inflated its operating income by 34,929,355 in 2019 through its wholly-owned subsidiary, Yihui Technology, Hangzhou Wenran, Shanghai Xifan, and Shenzhen Yulin97 yuan, inflated profit of 33,021,67243 yuan, accounting for 20 of the total profit of the current period03%。The corresponding financial data in the 2019 Annual Report of Sichuang Yihui was not truthfully disclosed. Through its wholly-owned subsidiary, Yihui Technology, Hangzhou Wenran, Shanghai Xifan, Shenzhen Yulin, Hangzhou Kaitai New Health Technology *** hereinafter referred to as Kaitai Xin), Yixin Huitong carried out false business, and confirmed the revenue and cost of related businesses with Guangdong Huashang and Henan Eton in advance, the cumulative inflated operating income in 2020 was 96,468,78613 yuan, the cumulative inflated cost is 9,228,18666 yuan, inflated profit of 83,941,38325 yuan, accounting for 67% of the total profit of the current period. The corresponding financial data in the 2020 Annual Report of Sichuang Yihui was not truthfully disclosed. [The emphasis here is on the irregularities disclosed in the annual report, which are consistent with the information above.] However, there is a detail that I don't know if I have paid attention to, that is, from January to September 2020, the profit fraud ratio of listed companies is 56%, and the whole year has reached 67%. 】