On April 17th, Wu Xiaoqiu, the director of the National Institute of Finance at Renmin University of China and director of the China Capital Market Research Institute, stated that companies like Eastern Group, once delisted, should not be allowed to escape punishment. Wu emphasized the importance of holding such companies accountable, suggesting measures such as confiscating their assets and sentencing them to long prison terms. The Eastern Group triggered delisting provisions due to financial fraud and a consecutive stock price below 20 yuan (RMB).
During the 19th China Investment Annual Conference Summit held on April 17th, Wu Xiaoqiu delivered a speech analyzing the profound logic behind the reconstruction of the capital market’s functions.
Regarding the recent attention drawn to the delisting case of Eastern Group in A-shares, Wu Xiaoqiu remarked, “Companies like Eastern Group, once delisted, should not be allowed to escape consequences. On its final day of trading before delisting, it still saw considerable volume. I often urge relevant departments that Eastern Group should serve as a case study, similar to the Enron case in the United States, to prevent market scandals in China in the future.”
Wu Xiaoqiu stressed the need to “confiscate their assets and make them sit in prison until the end,” highlighting the seriousness of fraudulent listings compared to financial fraud, suggesting that the penalties for fraudulent listings should be equally severe.
On April 15th, Eastern Group Limited (*ST Eastern) announced that it had received a preliminary notice from the Shanghai Stock Exchange to terminate the listing of its stock due to the stock price remaining below 1 yuan (RMB) for 20 consecutive trading days as of April 14, 2025, triggering the delisting condition.
Moreover, on March 17th, the Eastern Group received a preliminary administrative penalty notice from the China Securities Regulatory Commission for suspected fraudulent financial activities from 2020 to 2023, including false reporting of annual revenues.
In response to the situation, Wang Tianyu, a lawyer at Beijing Yingke (Nanjing) Law Firm, mentioned that affected investors could pursue legal claims based on relevant regulations.
The latest disclosure from Eastern Group indicates that as of the end of September 2024, the number of shareholders reached 129,000.
Following the release of this news, over a thousand netizens participated in discussions on Tencent, with many calling for strict punishment against fraudulent listed companies to ensure justice for investors. However, there were also voices expressing doubts about China’s ability to address such issues compared to the United States.
A Tencent user, hkmuy5s, commented, “In China, most big capital entities have backgrounds. Even if they did not before, they would seek protection and support once they grow their capital. These interests are not easily challenged by ordinary individuals!”
Another user, “Zaochen,” added, “In recent years, there have been too many cases of capital tycoons in China engaging in fraudulent listings, illegal fundraising, and absconding with money. The lessons are profound. It’s time to take strong measures and crack down on this behavior. I support Professor Wu.”