Red Star Capital Bureau reported on April 17 that following the CITIC Securities (600030. SH), Haitong Securities (600837. SH), Soochow Securities (601555.SH) became the third brokerage firm to be recently filed.
On the evening of April 16, Soochow Securities announced that the company received the "Notice of Case Filing" from the China Securities Regulatory Commission, because the company was suspected of failing to be diligent and conscientious in the sponsorship business of Gome Communications and Zixin Pharmaceutical's non-public issuance of shares, according to relevant laws and regulations, on April 8, 2024, the China Securities Regulatory Commission decided to file a case against the company.
Red Star Capital Bureau noted that Gome Communications (now "ST Meixun", 600898. SH), Zixin Pharmaceutical (delisted, 002118. SZ) had financial fraud during the private placement period, but Soochow Securities stated in the sponsorship summary report that "there were no false records, misleading statements or material omissions". Recently, both companies have received the "Prior Notice of Administrative Punishment and Market Prohibition" issued by the regulator, Gome Communications is suspected of constituting fraudulent issuance, and Zixin Pharmaceutical's financial fraud lasted for 9 years from 2013 to 2021.
The matter involves Gome Communications and Zixin Pharmaceutical's fixed increase
Soochow Securities is the sponsor
Gome's main products and services are the R&D, production and sales of mobile smart devices, and the actual controller was Huang Guangyu, the founder of Gome. In May 2023, due to losses for three consecutive years and uncertainty in the company's ability to continue operations in the latest year's audit report, Gome Communications was placed on other risk warnings and its stock abbreviation was changed to "ST Meixun". Recently, Gome Communication also said that due to continued losses in 2023, the company's shares may be subject to delisting risk warning after the disclosure of the annual report.
In September 2020, GOME launched a private placement, and issued a total of 32.85 million shares through this private placement, raising 166 million yuan. In this private placement, Soochow Securities served as the sponsor for a continuous supervision period until December 31, 2022.
On April 15, GOME received the "Advance Notice of Administrative Penalty and Market Prohibition" issued by the China Securities Regulatory Commission. After investigation, the company was suspected of violating the law for three facts: there were false records in the 2020 annual report, the non-public issuance of shares in 2020 constituted a fraudulent issuance, and the 2021 annual report had false records.
Among them, the relevant documents of Gome Communication's non-public offering in 2020 cited the data of false trade business income, and the company's false trade business revenue recognized from January to September 2020 was 578.2356 million yuan, accounting for 86.21% of the current operating income. In March 2021, the China Securities Regulatory Commission approved Gome Communication's application for non-public offering, that is, the directional issuance of shares to the controlling shareholder Shandong Longjidao Construction Co., Ltd., with a total of 165.6001 million yuan raised, and the raised funds were mainly used for the transformation project of Jingmei Electronics' intelligent terminal production line. There were false records in the documents related to the non-public issuance of shares by GOME, which constituted a fraudulent issuance.
The China Securities Regulatory Commission believes that Gome Communications is suspected of constituting illegal acts of information disclosure and fraudulent issuance, and intends to decide to order it to make corrections, give warnings and fine 21.56 million yuan, give warnings to a number of relevant responsible persons of the company, and impose fines of 1.8 million to 3 million yuan respectively, and impose 10-year market bans on the company's then chairman, general manager and chief financial officer.
Zixin Pharmaceutical, another party to the case, has been delisted from the Shenzhen Stock Exchange on August 4, 2023. Red Star Capital Bureau noted that in 2014, Zixin Pharmaceutical also carried out a private placement, in which Soochow Securities also served as the sponsor, and the continuous supervision period ended on December 31, 2017.
However, according to the "Advance Notice of Administrative Punishment and Market Ban" issued by the Jilin Securities Regulatory Bureau on April 8, Zixin Pharmaceutical's financial fraud lasted from 2013 to 2021, with a cumulative period of 9 years. From 2013 to 2020, Zixin Pharmaceutical failed to disclose related party transactions in accordance with regulations, resulting in suspected material omissions in the company's annual report; from 2014 to 2021, the company was suspected of inflating the procurement cost of forest ginseng to inflate inventory; from 2017 to 2018, the company inflated operating income and profits through fraud, including inflated revenue of 94 million yuan and inflated net profit of 85 million yuan in 2017, and inflated revenue of 200 million yuan and inflated net profit of 95 million yuan in 2018.
It is worth mentioning that Soochow Securities stated in the sponsorship summary report of the above two companies that during the period of continuous supervision, Soochow Securities reviewed and verified the company's information disclosure documents before and after to ensure that the disclosure of material information was timely, accurate, true and complete, and there were no false records, misleading statements or major omissions.
Soochow Securities' investment banking business has repeatedly stepped on the red line
During the year, three IPO sponsorships were withdrawn
According to public information, Soochow Securities, formerly known as Suzhou Securities, was established in 1993. Soochow Securities was listed in 2011 and is the eighth brokerage in China to go public through IPO. In recent years, Soochow Securities has made efforts in investment banking business, but the quality of its sponsorship has also been questioned.
Since the beginning of this year, Soochow Securities has sponsored a total of 10 IPO projects, and has voluntarily withdrawn 3 cases, namely Sword Agrochemical, Kuaida Agrochemical, and Jieruisi. It is worth noting that before the last IPO failed, two insurance agents, Sword Agrochemical and Soochow Securities, received regulatory fines for violating regulations.
In April 2020, shortly after receiving feedback on the IPO, Sword Agrochemical was issued a warning letter by the CSRC. After investigation, in the process of applying for an initial public offering of shares and listing, the company had a large number of problems such as abnormal acquisition and endorsement of paper notes receivable, refunds and recovery of customers with the same bills, and failure to separate accounting of entrusted processing materials according to the processing unit. In December 2021, due to the failure to be diligent and conscientious in the process of the IPO of Sword Agrochemical and insufficient verification of the issuer's notes receivable and other matters, Feng Song and Li Qiang, two insurance agents of Soochow Securities, were issued a warning letter by the CSRC.
The Red Star Capital Bureau checked the penalty information published on the website of the AMAC and found that in January last year, the Listing Review Center of the Beijing Stock Exchange also imposed self-discipline penalties on Li Haining and Li Jun, two insurance agents of Soochow Securities, involving a Novo (834261. BJ) initial sponsorship project. Judging from the resume, these two insurance agents are both senior vice presidents of the Beijing headquarters of Soochow Securities Investment Bank. Yinovi was listed on the Beijing Stock Exchange in April last year, and its performance has "changed face" in less than a year, with revenue and net profit falling by 0.20% and 33.36% year-on-year in 2023, respectively.
In 2021, the two IPO projects sponsored by Soochow Securities, Jianke Group and Hengxing New Materials, also had a situation of "withdrawal after investigation". On January 31 of that year, the two companies were selected by the Securities Industry Association for on-site inspection, but only in the past 10 days, they both withdrew their listing applications.
Red Star News reporter Jiang Ziwen
Edited by Yang Cheng
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