In recent years, financial fraud cases have been occurring frequently in the A-share market. Four listed companies, including Fudan Fuhua, Juewei Food, Cisco Ray, and Creative Information, were recently penalized for violations such as inflated revenue and false disclosures. They will be subject to “other risk warnings” and officially labeled as “ST” starting next week.
Fudan Fuhua has accumulated a huge amount of falsified financial data over the past three years. The announcement showed that the company had false records in its annual reports for 2019, 2020, and 2023, with a total of understated revenue of 53.2442 million yuan and inflated profits totaling 81.0655 million yuan. The company will be fined 4 million yuan, with several individuals receiving warnings and fines. Trading of the company’s stocks will be suspended on September 22, and starting from September 23, it will be renamed “ST Fuhua” with a daily trading limit adjustment of 5%.
Similarly, Cisco Ray was investigated for financial fraud. The company falsely reported 9.9604 million yuan in operating income and 7.0054 million yuan in profits in 2022, resulting in a 2 million yuan fine for the company and fines for relevant individuals. Its stock will be abbreviated as “ST Cisco Ray” from September 23, and special trading restrictions will apply.
Juewei Food’s violations span a longer period. The company failed to accurately report revenue from franchise store renovation business from 2017 to 2021, leading to understated operating income in annual reports for five consecutive years. The company was fined 4 million yuan, with responsible individuals also facing penalties. The company’s stock will be abbreviated as “ST Juewei” starting from September 23.
Creative Information’s fraudulent practices were more complex. During 2022 and 2023, the company recognized revenue using the total amount method without controlling interests, resulting in an overstated operating income of 394 million yuan. The company was penalized for significant false financial information and will rename its stock to “ST Creative” from September 23.
Besides the aforementioned four companies, several other serious financial fraud cases have entered the delisting process.
Shenzhen Guandao Digital Technology Co., Ltd. (*ST Guandao) will become the first stock on the North Exchange to be forcefully delisted due to major violations. The company falsified over 1.4 billion yuan in operating income from 2018 to the first half of 2024, with a fraud ratio exceeding 90% over many years. Recently, the actual controllers and several directors and supervisors of the company have been banned from the market.
State-owned enterprise’s Datang Gaohong has initiated the delisting process. The company fabricated trade transactions continuously from 2015 to 2023, falsely inflating revenue by nearly 19.8 billion yuan. They also used false financial data during private stock issuances, constituting fraudulent issuance. The company was fined 160 million yuan, with several top executives facing severe penalties and market bans.
Public data shows that financial fraud cases continue to rise significantly. In 2024, there were 61 cases of financial fraud, a 17% increase compared to the previous year, setting a new record high for the number of penalties imposed.