The financial fraud case of “former Bull Stock” Rendong Holdings Co.Ltd(002647) (002647, SZ), which soared nearly four times in 2020, has finally ushered in the follow-up!
On February 21, Rendong Holdings Co.Ltd(002647) announced that the company received the “prior notice of administrative punishment” (hereinafter referred to as the “notice”) issued by the CSRC on February 18.
According to the notice, the CSRC plans to order the company to make corrections, give a warning and impose a fine of 1.5 million yuan; Give a warning to Huo Dong and impose a fine of 1.2 million yuan; Wang Shishan and Huang Hao shall be warned and fined 500000 yuan respectively.
Financial report data fraud, in order to cooperate with the “worst dealer” to manipulate the stock price?
In the upcoming round of administrative punishment, in addition to Rendong Holdings Co.Ltd(002647) , Huo Dong, Wang Shishan and Huang Hao are to be punished.
It is understood that Huo Dong was the then chairman and Acting Secretary of the board of directors of the company, Wang Shishan was the then general manager, vice chairman and chief financial officer of the company, and Huang Hao was the Rendong Holdings Co.Ltd(002647) deputy general manager in charge of factoring business since March 2019.
Previously, Jinghua, which manipulated the share price of Rendong Holdings Co.Ltd(002647) with 83 securities accounts, although it was “fierce as a tiger” and made the company’s share price increase nearly four times in 2020, in the end, these securities accounts suffered a loss of 2.69 billion yuan, and Jinghua himself received an administrative penalty of 5 million yuan from the CSRC. Therefore, Jinghua is also jokingly called “the worst dealer” by investors.
So, Rendong Holdings Co.Ltd(002647) and the former executives of the above companies have played a role in the process of “playing around” the company’s share price? False financial report data may also play a role.
According to the notice, Rendong Holdings Co.Ltd(002647) 2019 annual and 2020 semi annual reports have false records. Specifically, the 2019 annual report has the problem of falsely increasing the factoring business income, profit and inaccurate amount of bad debt provision. The 2020 semi annual report also falsely increased the income and profit of factoring business.
According to the notice, in December 2018, Rendong Holdings Co.Ltd(002647) invented the accounts receivable factoring business of three companies, including Shenzhen Qianhai Heli commercial factoring Co., Ltd. (hereinafter referred to as “Heli factoring”) and Taiyuan Shengli mining equipment Co., Ltd. (hereinafter referred to as “Shengli factoring”).
Heli factoring did not issue commercial factoring loans to the above three companies, but falsely increased the factoring income of 38.9072 million yuan in 2019, and falsely increased the total profit of the same amount, accounting for 71.67% of the total profit disclosed in the current period.
At the end of 2019 and the beginning of 2020, Rendong Holdings Co.Ltd(002647) repeated the old technique and invented the factoring business carried out by Heli factoring on four companies including Huaxun ark Technology Co., Ltd. In the first half of 2020, the factoring business income was falsely increased by 20.6536 million yuan and the same total profit was falsely increased, accounting for 202.32% of the absolute value of the total profit disclosed in the current period.
In addition to falsely increasing income and profits, Rendong Holdings Co.Ltd(002647) has the problem of inaccurate amount of bad debt provision in the 2019 financial report. At the end of 2019, Rendong Holdings Co.Ltd(002647) made provision for bad debts of accounts receivable of 6.78 million yuan for factoring accounts receivable with a total book balance of 226 million yuan for three companies including Shengli ya at the proportion of 3%.
However, at the end of 2019, Rendong Holdings Co.Ltd(002647) the actual uncollected amount of creditor’s rights against three companies including Shengli Ya was 269 million yuan, and the nature of the creditor’s rights was not factoring, so the accrual standard was wrong. The final result is that in 2019 Rendong Holdings Co.Ltd(002647) , the bad debt provision of RMB 2012 million was less accrued, and the total inflated profit reached RMB 2012 million, accounting for 37.06% of the total disclosed profit of the current period.
The company and relevant executives are to be fined a total of 3.2 million yuan
In addition to the false records of the financial information in the annual report and semi annual report, Rendong Holdings Co.Ltd(002647) has not disclosed the default of failing to pay off the major debts due in time as required.
Heli factoring borrowed 180 million yuan from Huarong Qianhai Wealth Management Co., Ltd. with a maturity date of November 7, 2020. It failed to pay off after maturity. A renewal agreement was signed on January 31, 2021.
The above debt accounted for 18.22% of the audited net assets in the third quarter report of Rendong Holdings Co.Ltd(002647) 2020. According to relevant regulations, Rendong Holdings Co.Ltd(002647) shall disclose the default of failing to pay off the due major debts in a timely manner. However, the company did not disclose in the 2020 annual report until April 2021, which violated relevant regulations.
For the above violations, the notice announced the administrative punishment to be decided: order Rendong Holdings Co.Ltd(002647) to make corrections, give a warning and impose a fine of 1.5 million yuan; Give a warning to Huo Dong and impose a fine of 1.2 million yuan; Wang Shishan and Huang Hao were warned and fined 500000 yuan respectively.
Overall, the Rendong Holdings Co.Ltd(002647) and the then senior executives involved in financial fraud are to be fined a total of 3.2 million yuan.
