Recently, the total market value of the Indian stock market has reached a record high, which has attracted the attention of many netizens, and India, as an emerging country, is also thriving, and in the past 10 years, the Indian stock market has grown significantly.
China, which is also an Asian country, has a significantly stronger economy and better market vitality than India, but our stock market is indescribable, and 3,000 points is like a spell, becoming a lingering shadow.
There are various reasons why A-shares have not risen for a long time, one of which is that many listed companies have fraud, and some securities companies have cooperated with listed companies to commit fraud even though they know that the fraud is in violation, but the punishment they have endured is not painful.
Recently, ST Huichen was punished for financial fraud, which once again caused a lot of anger to the securities company's practice of assisting listed companies in fraud.
A few days ago, ST Huichen issued an announcement that they received the content of the "Administrative Penalty Prior Notice" from the China Securities Regulatory Commission, and it was found that Huichen had been falsely recorded in financial reports from 2018 to 2022, and the profits falsely recorded were very exaggerated.
Among them, the inflated profit in 2020 was 60.9616 million yuan, accounting for 60.69% of the total disclosed profit in the current period, the inflated profit in 2021 was 17.2119 million yuan, accounting for 36.45% of the absolute value of the total disclosed profit in the current period, and the inflated profit in 2022 was 104.962 million yuan, accounting for 49.84% of the absolute value of the total disclosed profit in the current period.
The company took advantage of all the benefits, they went public in 2020, they inflated their profits as much as possible before going public, so as to increase their valuation, and after going public, in order to reduce dividends and reduce profits as much as possible, this is completely using the stock market as an ATM.
The most important thing is that Huichen also falsified in the listing prospectus, and the sponsor and the financial auditor did not find the problem with such obvious fraud in a row?
If you want to say that no problems have been found, I don't think anyone will believe it, but in the face of interests, some people completely put aside laws and rules, and then "selectively omission".
For example, Huichen's sponsor is CITIC Securities, and Huichen has already committed financial fraud before listing, has CITIC Securities not found problems in the process of sponsorship?
We are not the parties to this question, and we cannot answer it, but it is an indisputable fact that Huichen falsified before listing, which has been concluded by the investigation of the regulatory authorities.
In the sponsorship commitment, CITIC Securities clearly mentioned that CITIC Securities has verified and confirmed that there are no false records, misleading statements or material omissions in the prospectus, and assumes corresponding legal responsibility for its authenticity, accuracy and completeness.
I think there are only two possibilities for such a large securities institution to find a problem: one is that the securities company's ability is too weak to even see the basic financial fraud; and the other is that they have discovered the problem, but in order to help the listed company go public and earn a generous sponsor fee, they can only turn a blind eye.
After all, for these sponsors, once the company is successfully listed, the income they receive is very high, for example, the original Huichen share issuance fee reached 74.83 million yuan, of which CITIC Securities obtained underwriting and sponsorship fees reached 53.8186 million yuan.
Compared with this high income, the cost borne by securities institutions because they are suspected of assisting listed companies to commit fraud is relatively low.
As for what kind of punishment CITIC Securities will be in this time and how much compensation losses will be borne by us, we don't know, but there is a very typical example for reference, that is, GF Securities was affected by the financial fraud incident of Kangmei Pharmaceutical.
In 2018, the China Securities Regulatory Commission issued an announcement on the filing of a "case for investigation", according to the investigation of the China Securities Regulatory Commission, Kangmei Pharmaceutical inflated monetary funds by a total of 88.71 billion yuan in its financial reports from 2016 to 2018, setting a new record of financial fraud of A-share listed companies.
Is such a huge fraud just a matter of the Kangmei family? Are there any responsibilities of recommending institutions, auditing institutions, and accounting institutions?
In response to this matter, many netizens pointed the finger at Kangmei Pharmaceutical's sponsor institution, that is, GF Securities, when Kangmei Pharmaceutical was listed in 2001, its sponsor was GF Securities, and from 2001 to 2019, GF Securities has been Kangmei Pharmaceutical's "close partner", from 2006 to 2019, Kangmei Pharmaceutical has raised a total of 25.255 billion yuan through GF Securities through private placement, corporate bonds, corporate convertible bonds, etc.
In this process, we don't know whether GF Securities has carefully reviewed and whether it has found problems in Kangmei, but what is interesting is that as early as 2014, an investor of Kangmei Pharmaceutical directly reported the violations of laws and regulations of Kangmei Pharmaceutical's management to the CSRC with his real name.
But GF Securities is definitely not innocent, in the Kangmei fraud incident, GF Securities at least "negligent", so in the end they were also punished accordingly.
On July 10, 2020, GF Securities was suspended as a sponsor for 6 months due to Kangmei's financial fraud, and temporarily refused to accept documents related to bond underwriting business for 12 months, and some other managers were also punished to varying degrees.
However, this penalty is obviously a bit painless, and after the expiration of the penalty, all the business of GF Securities was carried out normally, and even after it was again exposed to participate in the financial fraud of listed companies, the rating could be improved.
In July this year, GF Securities issued an announcement that they received the "Prior Notice of Administrative Punishment" from the China Securities Regulatory Commission, according to the announcement, GF Securities was suspected of failing to be diligent and conscientious in providing sponsorship services for Shangmei Ecological Landscape Co., Ltd. in 2018 in the process of providing sponsorship services for the non-public issuance of shares in 2018, and issued documents containing false records, and was finally ordered to rectify and fined 10,216,980 yuan, and the other two sponsor representatives were warned and fined 250,000 yuan.
However, it is quite ironic that GF Securities has been caught up in the above-mentioned company fraud scandal in a row, but their rating has been continuously improved.
On December 8, the Securities Association of China announced the results of the 2023 quality assessment of the execution of the bond business of securities companies, in which GF Securities was directly upgraded from Class C to Class A by two levels, which shows that GF Securities, which was caught in the fraud turmoil, did not affect the normal development in the slightest.
Seeing this, many netizens were stunned, you must know that in some mature capital markets, if the sponsor does not fulfill its responsibilities, it may have been punished for bankruptcy long ago if it issued a false report.
For example, in the Enron incident in 2001, Arthur Andersen, which audited Enron, was fined $500,000 and banned from doing business for five years, resulting in outright bankruptcy and Arthur Andersen disappeared from the world's top five accounting firms.
The three major investment banks that sponsored Enron's IPO, Citibank, JPMorgan Chase and Bank of America were also penalized for alleged financial fraud, paying $2 billion, $2 billion and $69 million in damages to victims, respectively.
Under the heavy punishment, these sponsor institutions and accounting firms have obviously become much more honest, they do not dare to easily participate in the financial fraud of listed companies, but conscientiously make objective and fair reports, in this environment, their stock market has also ushered in a long period of prosperity.
On the other hand, in our current stock market, some sponsor institutions, accounting firms, and audit institutions either explicitly or covertly help some listed companies to commit fraud, or selectively "omission", but the final punishment is not painful, so they have no fear.