On October 26, 2024, China International Capital Corporation Limited (CICC) issued a statement announcing that they had been warned and fined 8 million RMB for their lack of diligence in the sponsoring of Shanghai Si’er Xin Technology Co., Ltd.’s (Si’er Xin) IPO business. Additionally, two executives directly responsible for the project were fined 1.5 million RMB each.
Si’er Xin had submitted an application for an IPO on the Science and Technology Innovation Board in August 2021. However, in July 2022, Si’er Xin withdrew its IPO application, and the Shanghai Stock Exchange decided to terminate the review process. On October 25, 2024, CICC received a “Notice of Administrative Penalty Advance” from the China Securities Regulatory Commission.
The notice stated that CICC had provided sponsor services for Si’er Xin’s first public offering and listing on the Science and Technology Innovation Board and that Zhao Shanjun and Chen Liren were the signing representatives. During this process, discrepancies were found in the issuance sponsor documents, such as failure to thoroughly verify hardware production, software sales, customer visit procedures, fund flow verification procedures, and interest calculation on related party borrowing.
As a result of the false information in the issuance sponsor documents provided by CICC during Si’er Xin’s IPO process, which violated the Securities Law, CICC was reprimanded. They were ordered to forfeit 2 million RMB of the issuance sponsorship income and were fined 6 million RMB. Zhao Shanjun and Chen Liren were also reprimanded and fined 1.5 million RMB each.
Prior to this incident, Si’er Xin had already been penalized for financial fraud and fraudulent fundraising. They had fabricated significant false information in their securities issuance documents, with the prospectus containing falsified financial data. In 2020, they inflated operating income by a total of 15.3672 million RMB, accounting for 11.55% of that year’s revenue, and inflated total profits by 12.4617 million RMB, equivalent to 118.48% of the total profit for that year.
Consequently, Si’er Xin was fined 4 million RMB. Huang Xueliang, former chairman of Si’er Xin, Toshio Nakama, former director, CEO, and general manager of Si’er Xin, were fined 3 million RMB each. Lin Kaipeng, former director and senior vice president of Si’er Xin, and Xiong Shikun, former director, senior vice president, and board secretary of Si’er Xin, were fined 2 million RMB each. Li Xiongying, former chief financial officer of Si’er Xin, was fined 1.5 million RMB, and Yang Lu, former chairman of the Si’er Xin Board of Supervisors, was fined 1 million RMB.
On June 11, the Shanghai Stock Exchange also issued a disciplinary penalty: Si’er Xin is not allowed to submit IPO application documents for the next five years.
As of the closing on October 25, CICC’s stock price was reported at 36.25 RMB, with a total market capitalization of 175 billion RMB.