LETV Securities Misrepresentation liability dispute awaiting trial.
On the evening of Shanxi Securities Co.Ltd(002500) on January 17, it was announced that the holding subsidiary Zhongde securities recently received a civil complaint served by the Beijing Financial court. 2000 plaintiffs such as Shanghai Junying asset management partnership (limited partnership) filed a civil lawsuit against LETV and other 21 defendants, asking LETV to compensate for the investment loss caused by its false statement, totaling 4.571 billion yuan, The other 20 defendants were required to bear joint and several liability.
Public information shows that in addition to LETV, the defendant also has 14 natural persons such as Jia Yueting; Sino German securities, Zhongtai Securities Co.Ltd(600918) and Ping An Securities; Lianda, Huapu Tianjian and ShineWing are three accounting firms.
It is understood that this case is the first ordinary representative litigation case of securities disputes accepted by the Beijing court. At present, the first instance has not yet opened. Shanxi Securities Co.Ltd(002500) said that it was impossible to judge the impact on the company’s profits in the current period or after the period because the trial had not yet been held.
2000 plaintiffs claimed compensation of 4.571 billion yuan
The storm over LETV is not over yet. On January 13, Zhongde securities received a civil complaint served by the Beijing Financial court. As one of the defendants, it was sued by 2000 investors in the case of securities false statements such as LETV and Jia Yueting.
As the plaintiff, LETV investors believe that LETV’s misrepresentation has damaged its rights and interests, and require LETV to bear civil liability for misrepresentation infringement; Jia Yueting and other 14 natural persons shall be jointly and severally liable for false statements; Three securities companies including Sino German securities and three accounting firms are jointly and severally liable for failure to exercise due diligence and fail to find the financial fraud of LETV.
The investor appealed to the court to order LETV to pay the plaintiff infringement compensation for investment losses caused by false statements (including investment balance loss, stamp duty, commission and interest), totaling 4.571 billion yuan; Order the other 20 defendants except LETV to bear joint and several liability for the above losses of the plaintiff; Order the defendant to jointly bear all litigation costs of the case.
According to the announcement of Beijing Financial court, in addition to LETV, the defendant also has 14 natural persons, including Jia Yueting, Jia Yuemin (then deputy general manager of LETV), Wu Meng (then chairman of LETV’s board of supervisors), Jia Yuefang (Jia Yueting’s sister), Ji Xiaoqing (then LETV’s supervisor), Cao Bin (then LETV’s independent director), Zhu Ning (then LETV’s independent director) Shen Yanfang (then independent director of LETV), Zhang te (then Secretary of LETV), Zhao Kai (then Secretary of LETV), Deng Wei (then Secretary and director of LETV), Liu Hong (then supervisor and chairman of LETV), Zhang Minhui (then vice president of LETV), Tan Shu (then vice president of LETV).
three securities companies also stood in the dock, namely Zhongde securities, Zhongtai Securities Co.Ltd(600918) and Ping An Securities. In addition, there are three accounting firms as defendants, namely yianda accounting firm (special general partnership), Huapu Tianjian accounting firm (Beijing) Co., Ltd. and ShineWing accounting firm (special general partnership).
As early as may 2021, the Beijing Financial court accepted the dispute over the liability for Securities Misrepresentation between investors and more than 20 defendants such as LETV and Jia Yueting.
After preliminary examination, the Beijing Financial court decided to apply the litigation procedure of ordinary representative to try the case, and made a civil ruling on July 30, 2021 to determine the scope of obligees in the case. After the written order was served, some parties applied for reconsideration within the statutory period, and then the Beijing Higher People’s court rejected the application for reconsideration of these parties. In September, the Beijing Financial court issued an announcement on the registration of litigation rights of representatives in Securities Misrepresentation liability disputes such as LETV and Jia Yueting.
It is understood that this case is the first ordinary representative litigation case of securities disputes accepted by the Beijing court. Insiders explained that “ordinary representative litigation” said that according to the relevant provisions of the securities law of the people’s Republic of China, when investors file securities civil compensation litigation such as false statements, if the subject matter of the litigation is the same type and there are a large number of parties, they can elect a representative for litigation according to law. If there are many other investors who may have the same claim in a lawsuit filed in accordance with the provisions of the preceding paragraph, the people’s court may issue a public announcement to explain the case of the claim and notify the investor to register with the people’s court within a certain period of time. The judgments and orders made by the people’s court shall be effective for the registered investors.
the former “gem brother” fell
LETV was listed on the gem in 2010, and the company was very popular in the market, with a market value of more than 170 billion yuan. With the emergence of LETV capital chain crisis, the company began to suffer huge losses. Jia Yueting has left the United States and has not returned yet.
In April 2019, because LETV and Jia Yueting were suspected of illegal information disclosure, the CSRC decided to file a case against LETV and Jia Yueting for investigation.
Soon, the company’s shares were suspended from listing on May 13, 2019 because the audited ending net assets attributable to the shareholders of the listed company in 2018 were negative. The 2019 annual report disclosed by LETV on April 27, 2020 shows that the audited net profit attributable to the shareholders of the listed company, net profit after deducting non recurring profits and losses and net assets at the end of the period in 2019 are negative, and the financial accounting report has been issued with qualified audit report by Dahua Certified Public Accountants (special general partnership), It touches on the termination of listing of shares stipulated by Shenzhen Stock Exchange.
LETV was officially delisted on July 21, 2020. On the last trading day, the company’s 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.
The following year, administrative punishment was implemented. LETV announced on April 12, 2021 that it had received the decision on administrative punishment made by the CSRC. The CSRC pointed out that due to the ten-year financial fraud from 2007 to 2016, LETV submitted and disclosed false records in the IPO related documents and the annual report from 2010 to 2016, failed to disclose the related party transactions as required, failed to disclose the provision of guarantees for LETV holdings and other companies, and failed to truthfully disclose the performance of Jia Moufang and Jia Yueting’s loan commitments to listed companies, In 2016, the non-public offering of shares constituted illegal facts such as fraudulent issuance. The CSRC imposed administrative penalties on 15 responsible subjects such as LETV and Jia Yueting, of which LETV was fined more than 240 million yuan and Jia Yueting was fined more than 241 million yuan.
After LETV retreated to the new third board, from the share price performance of the new third board, the company’s share price once went all the way to 2.56 yuan, and then continued to fall. As of January 17, 2022, the closing price of the company is 0.65 yuan.
