Shenzhen Special Information Co., Ltd. (Special Information) announced on May 13th that the company has been fined for falsifying financial statements for five consecutive years, and its stock will be subject to other risk warnings starting from May 14th.
In the “Notice Regarding the Implementation of Other Risk Warnings on Company Stock Trading and Suspension/Resumption of Stock Trading” issued by Special Information, the company and related personnel received an “Administrative Penalty and Pre-notification of Market Entry Ban” from the Shenzhen Regulatory Bureau of the China Securities Regulatory Commission.
The announcement stated that during the period from 2015 to 2019, the company inflated revenue and profits through methods such as adjusting operating costs across periods and fabricating business transactions, leading the Shenzhen Stock Exchange to implement other risk warnings on the company’s stock.
As a result, the company’s stock was suspended for one day starting from May 13th, 2024 (Monday), and resumed trading on May 14th, 2024. The stock will be subject to other risk warnings starting from May 14th, with the stock abbreviation changed from “Special Information” to “ST Texin”, and the daily trading limit set at 5%.
Meanwhile, Special Information and individuals involved were fined a total of 23.5 million yuan.
It is reported that Special Information’s subsidiary, Shenzhen Dongzhi Technology Co., Ltd. (later renamed as Shenzhen Special Information Eastwise Technology Co., Ltd., “Special Eastwise”), understated or delayed booking accounts receivable purchase costs, and adjusted operating costs across periods to either understate or overstate operating costs during the period from 2015 to 2019. From 2015 to 2018, Special Eastwise inflated operating revenue by 328 million yuan, operating costs by 284 million yuan, with an inflated total profit of 43.8671 million yuan. The total profit for 2019 was understated by 21.0806 million yuan.
After the exposure of suspected financial fraud by Special Eastwise in 2019, its performance declined and even suffered losses. From 2020 to 2023, Special Eastwise’s net profits were -389 million yuan, -733 million yuan, 26.0026 million yuan, -640.874 million yuan, with accumulated losses totaling 1.1 billion yuan in the past four years.
Many netizens have expressed their views on this issue, with the vast majority advocating for the rights of shareholders, believing that shareholders’ losses should not be overlooked, and that listed companies should compensate them for their losses.
“Wooden Fish Market” asked: “What about the shareholders’ money?”
“Half-Life Twists and Turns” said: “Sometimes I really don’t understand. With so much falsification, who speaks for the shareholders? Isn’t the harm caused by falsification being addressed? Are shareholders’ losses just dismissed?”
Netizen “Bright Smile” believes that penalties for regulatory violations and falsification in the Chinese stock market are too lenient, saying: “Besides being fined, that’s it, the cost is too light.”
Netizen “I am the father of the spray boys” commented: “There are too many incidents of falsification like this.”