Recently, Huaxi Securities released a statement revealing key developments in the responsibility dispute case of Jintongling Securities’ false statements. Over a span of 6 years, Jintongling systematically falsified its financials, inflating its operating income by 1.135 billion yuan and its profits by 468 million yuan. The interests of 43,300 investors were harmed. This is one of the most significant representative litigation cases in the A-share market in recent years in terms of the amount involved and the number of investors affected.
On January 5th, the China Securities Regulatory Commission held a symposium on the comprehensive deterrence and prevention of financial fraud in the capital market across departments, disclosing progress in handling financial fraud cases since 2024, including the accountability of relevant intermediary institutions in cases such as Jintongling and Jinzhou Port.
Jintongling was once considered a “star-listed company” in the high-end fluid machinery manufacturing sector in China. After going public in 2010, the company’s performance grew rapidly, with revenue surpassing 1 billion yuan in 2017. From 2016 to 2018, the company won environmental protection projects worth over tens of billions yuan, attracting significant attention from the capital market.
However, in April 2023, Jintongling announced that when compiling the 2022 financial report, they discovered significant losses and errors in previous performance. Following a self-audit, the profits for 2021 were revised from a gain of 15.057 million yuan to a massive loss of 67.9087 million yuan.
In June of the same year, Jintongling came under investigation. It was found that over a period of six years from 2017 to 2022, Jintongling inflated its operating income by 1.135 billion yuan and its profits by 468 million yuan.
The previous “peak” of development was, in reality, a false prosperity driven by financial fraud.
Over the 6 fraudulent years, the total amount of inflated or deflated profits as a percentage of disclosed profits each year reached as high as 103.06%, 133.10%, 31.35%, 101.55%, 5774.38%, and 11.83%, with the profit decrease in 2019 exceeding 57 times.
Their fraudulent methods were highly systematic, utilizing tactics such as forging project progress, recognizing unrealized income prematurely, and not offsetting income from sales returns to “bi-directionally adjust” profits in multiple years to mask the deteriorating business reality.
In June 2023, Jintongling was investigated by the China Securities Regulatory Commission; in 2024, the company and related responsible individuals were administratively penalized. In December 2024, Jintongling and several senior executives were handed over to the judiciary for suspected fraudulent issuance and failure to disclose important information.
In September 2025, the Shanghai Third Intermediate People’s Court ruled in the first instance that Jintongling committed securities fraud, imposing a fine of 8 million yuan, while the then Chairman Ji Wei was sentenced to 6 years in prison. Several senior executives were fined, with a total amount exceeding tens of millions in penalties.
On the civil front, at the end of 2024, the Nanjing Intermediate People’s Court initiated a special representative litigation, and in December 2025, a first-instance judgment confirmed that Jintongling was required to compensate 775 million yuan to 43,000 investors.
Another major focus of the Jintongling fraud case is the comprehensive accountability of intermediary institutions – how did numerous professional securities firms and accounting firms remain oblivious during Jintongling’s six years of financial fraud?
As one of the joint defendants, Huaxi Securities had its underwriting qualifications suspended for 6 months, with two underwriting representatives barred from the market for 2 years; Dahua Accounting Firm was fined over 44 million yuan and had its securities service operations suspended for 6 months; several securities firms and related personnel were issued warning letters. The joint liability of other intermediary institutions is still under further review.
The suspension of underwriting qualifications has had a significant impact on Huaxi Securities. Its investment banking revenue has continuously declined, with no equity financing projects implemented in 2025, and its investment banking service quality has been rated as the lowest class C for three consecutive years.
Although the awarded compensation amount is substantial, the eventual full compensation for investors still remains uncertain. Jintongling has entered a restructuring process and has been subjected to delisting risk warnings. As of the end of the third quarter of 2025, the company’s shareholders’ equity was only 274 million yuan, far below the 775 million yuan compensation scale.
This means that in the context of the company’s insolvency and high delisting risk, the extent to which investors will actually be compensated largely depends on the intermediary institutions’ assumption of joint responsibility.
The Jintongling case is considered a landmark case in China’s capital market for “severe punishment of fraud and thorough accountability.”