The aftermath of LETV’s financial fraud is not over. The two institutions received a ticket, and Ping An Securities, the sponsor, suspended the qualification of the sponsor for three months!
The aftermath of LETV’s financial fraud is not over. Zhongde securities, a former sponsor of LETV’s refinancing project Shanxi Securities Co.Ltd(002500) holding subsidiary, received a ticket from the CSRC on March 20. At the same time, Ping An Securities, the sponsor responsible for LETV’s IPO business, also received a ticket from Shenzhen securities regulatory bureau. Ping An Securities was ordered to correct and suspend its qualification as a sponsor for three months.
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two organizations punished
On March 20, Shanxi Securities Co.Ltd(002500) announced that the holding subsidiary Zhongde securities received the notice of administrative punishment from the CSRC, which determined that the non-public offering recommendation business of LETV of Zhongde securities was suspected of failing to be diligent and responsible. First, the sales information of the top ten customers was not completely obtained and compiled; Second, the authenticity of the business was not effectively verified. Yang Lijun and Wang Xin, the signing and recommendation representatives of LETV’s non-public offering, are the directly responsible executives. The CSRC plans to order China Germany securities to make corrections, give a warning, confiscate its business income of 5.66 million yuan and impose a fine of 11.32 million yuan; Yang Lijun and Wang Xin were warned and fined 150000 yuan respectively.
On January 18 this year, Shanxi Securities Co.Ltd(002500) once disclosed that the Securities Regulatory Commission decided to file a case against Sino German Securities for its holding subsidiary Sino German securities was suspected of violating laws and regulations in the recommendation business of LETV’s 2016 non-public offering of shares.
On January 17 this year, Shanxi Securities Co.Ltd(002500) also announced that on January 13, Zhongde securities, the holding subsidiary of the company, received a civil complaint served by the Beijing Financial court. The cause of action was a dispute over the liability for Securities Misrepresentation. Shanghai Junying asset management partnership (limited partnership) and other 2000 plaintiffs filed a civil lawsuit against LETV (LETV information technology (Beijing) Co., Ltd.) and other 21 defendants to the Beijing Financial court, requiring LETV to compensate for the investment loss of 4.571 billion yuan caused by its false statement, and requiring the other 20 defendants to bear joint and several liability. The defendants of the lawsuit involved 14 natural persons such as LETV and Jia Yueting, 3 securities companies such as China Germany securities and 3 accounting firms.
In addition to Zhongde securities, the reporter of China Securities News Agency also learned from relevant persons close to the regulators that Shenzhen Securities Regulatory Bureau recently issued a prior notice of administrative regulatory measures to Ping An Securities, which plans to order Ping An Securities to make corrections and suspend the qualification of recommendation agency for three months, and identify the recommendation representative and then person in charge of recommendation business of LETV IPO project as inappropriate personnel for 5-10 years, Other relevant personnel related to compliance business have been taken measures such as regulatory talks.
In this regard, on the evening of March 20, Ping An Securities said that the company had received a prior notice. At the same time, the statement said that in the past decade, the company has continued to establish and improve the internal control mechanism, and the level of compliance risk control has continued to improve. Based on the principle of customer first, the company will actively communicate with the supervision on the basis of laws and regulations, so as to better serve the development of the real economy.
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LETV has falsely increased its revenue for ten consecutive years
On May 26, 2015, LETV announced its application for non-public offering. On June 2, 2016, LETV received the reply from the CSRC. On August 8, the non-public offering of shares was listed on the Shenzhen Stock Exchange. LETV issued 106.6 million new shares to four qualified investors, raising 4.799 billion yuan.
According to the investigation of the CSRC, LETV falsely increased its performance for ten consecutive years from 2007 to 2016, including the financial data of non-public offering application documents from 2012 to 2014 and from January to June 2015. From 2012 to 2014, LETV falsely increased its revenue by 896533 million yuan, 1999817 million yuan and 3519419 million yuan respectively, and falsely increased its profits by 84.451 million yuan, 1933969 million yuan and 3427038 million yuan, accounting for 37.04%, 78.49% and 470.11% of the total profits disclosed in the current period.
From July 21, 2020, LETV terminated its listing and trading. On the last trading day of LETV on July 20, the final share price closed at RMB 0.18, with a total market value of RMB 718 million, more than 99% of the market value of RMB 170 billion at the peak. By the end of December 2019, LETV had a total of 280800 shareholders. In addition to the top ten shareholders, the remaining investors held about 62% of the shares.
According to relevant regulations, the gem of Shenzhen Stock Exchange does not accept the application for re listing of the company’s shares. Therefore, LETV will not be able to re list after delisting.
It is worth mentioning that on July 2, 2020, Jia Yueting, founder and actual controller of LETV, issued an open letter announcing that the personal bankruptcy reorganization had been completed on June 26. He said that personally, this means a restart of life.
Financial fraud has always been the focus of the CSRC. At present, the supervision of intermediaries and employees in IPO and refinancing has been strengthened through a variety of ways. The ticket issued by Zhongde securities and Ping An Securities is a powerful measure to fully implement the law enforcement concept of “zero tolerance”, further strengthen the supervision of intermediaries such as sponsors, and tighten the responsibility of intermediaries.
The CSRC has repeatedly stated that it will continue to urge intermediaries and their employees to return to their positions and fulfill their responsibilities, give full play to the responsibilities of the “gatekeeper” of the capital market, focus on key areas, highlight major cases, adhere to the “double investigation of one case”, effectively increase the cost of violations, effectively enhance the deterrence of law enforcement, safeguard the legitimate rights and interests of issuers and investors, and provide a strong legal guarantee for the reform, development and stability of the capital market. It can be expected that the regulatory authorities will severely punish intermediaries who dare to touch the red line, and investigate and deal with them severely and quickly.
