Our reporter Cheng Wei reports from Beijing
On May 8, the lowest priced stock in the A-share market, *ST Meishang (300495.SZ, formerly known as "Meishang Ecology"), ushered in the last normal trading day of its listing.
After the company mainly engaged in garden business was listed, it was punished by the China Securities Regulatory Commission and the Shenzhen Stock Exchange many times and in turn for continuous financial fraud, information disclosure fraud, fraudulent issuance, and misappropriation of huge funds by major shareholders in the nine years ending in 2020.
In 2018, Wang Yingyan, the actual controller of *ST Meishang, was selected into the list of the best female CEOs of listed companies in China by Forbes, and the market value of *ST Meishang was 8 billion yuan at this time. Image source: *ST Meishang subsidiary website
The first "penny stock"
On May 7, *ST Meishang's closing price was $0.15, the lowest among the 5,113 stocks in the Shanghai and Shenzhen markets.
This also means that if there are no decisive reversal factors such as suspension and restructuring on May 8, ST Meishang can rise by up to 20% due to the rise and fall rules of Shenzhen ChiNext stocks, and it will not be able to escape the fate of the stock price below 1 yuan for 20 consecutive trading days and facing forced delisting.
The actual disk shows that on May 8, *ST Meishang did not suspend trading.
On the evening of May 7, *ST Meishang announced that according to the relevant provisions of Article 10.2.1 of the Shenzhen Stock Exchange's "GEM Stock Listing Rules (2024 Revision)", the daily stock closing price of listed companies for 20 consecutive trading days is lower than 1 yuan, and the Shenzhen Stock Exchange will terminate the listing and trading of its shares. As of May 7, 2024, the closing price of the company's shares has been below 1 yuan for 19 consecutive trading days, and there is a risk that the company's shares may be terminated due to the stock price being lower than the par value.
This is the 10th time the company has recently issued a risk warning that it may be delisted due to a face value of less than 1 yuan.
As of May 7, there were 15 stocks in the Shanghai and Shenzhen stock markets with stock prices below 1 yuan, including 3 in Shanghai and 12 in Shenzhen. In the Hong Kong stock market, stocks with a share price of less than 1 yuan are called "cent stocks", and "cent" is a transliteration of the English "cent" (cent), which means that the stock price is so low that it is calculated in "cents".
*On April 1, 2016, April Fool's Day, ST Merchant's share price hit an all-time high of $153 per share.
On April 27, 2016, the stock was given 20 shares for every 10 shares, and the stock price was diluted to 54.09 yuan (opening price), and in the following year, the price of the stock basically fluctuated around 54 yuan, and on April 27, 2017, the stock was given away again by giving away 15 shares for every 10 shares, reducing the stock price to 16.75 yuan (opening price).
Since then, the stock has been falling all the way to the lowest price of $0.76 per share and closing at $0.92 in the stock crash around February 8, 2024.
On March 23, 2024, the stock fell below $1 again, rebounded slightly, and has been sinking "below the surface" of $1 since April 8 and began to accelerate its continuous plunge. on April 15, down 17.58%; April 16, down 20%; On April 18, it fell 16.39%, and the stock price was already below 0.5 yuan.
On April 19, the stock fell another 15.69% to close at $0.41 per share. Since then, the stock has continued to plummet, and by May 7, the price per share was 0.15 yuan - because the stock price was too low, the stock rose and fell by more than 5% for every 1 cent at this time, becoming a major spectacle in the A-share market.
On May 8, the lowest price of the stock was 0.12 yuan, down 13.33%. On that day, its closing price was fixed at $0.13 - the last day of normal trading of the stock in the A-share market, where it drew a rest.
*ST Meishang has submitted an application to the Shenzhen Stock Exchange for "withdrawal of delisting risk warning" in a number of recent announcements, but has not been approved. Correspondingly, *ST Meishang has not replied to a number of letters of concern from the Shenzhen Stock Exchange or repeatedly postponed its reply, and the Shenzhen Stock Exchange is furious and issued a warning that if it continues not to reply in time, "there will be a risk of delisting".
Another redemption channel for *ST Meishang in the A-share market is the previous bankruptcy reorganization. However, on April 29, *ST Meishang issued the "Announcement on the Withdrawal of the Pre-reorganization Application by Creditors and the Termination of the Company's Pre-reorganization Procedure", which means that the last door for the company to survive in the A-share market has also been closed.
At this point, as long as *ST Meishang does not stop trading on May 8, it means that this day is its end in the A-share market.
*ST Meishang monthly candlestick chart, its highest price is 153 yuan, and the closing price on May 7, 2024 is 0.15 yuan, which is the lowest in the Shanghai and Shenzhen stock markets.
Forgery
On April 30, the Shenzhen Stock Exchange announced that it would give "public identification" and disciplinary sanctions to *ST Meishang and Wang Yingyan, the company's chairman at the time, the chairman, general manager and actual controller, as well as Xu Jing, the then director and actual controller.
The Shenzhen Stock Exchange determined that *ST Meishang's prospectus, periodic report and offering documents contained false records.
According to the determination, *ST Meishang inflated its net profit by recognizing the recovery of accounts receivable in advance, falsely recording bank interest income, not adjusting project income according to the approved amount, and inflating the income of subsidiaries.
Among them, the inflated net profit in 2012 was 11.71 million yuan, accounting for 16.56% of the disclosed net profit in the current period; In 2013, the inflated net profit was 16.52 million yuan, accounting for 16.31% of the disclosed net profit in the current period; In 2014, the net profit was inflated by 7.67 million yuan, accounting for 7.12% of the disclosed net profit in the current period, resulting in a false record in the prospectus of *ST Meishang's initial public offering of shares in 2015 and listing on the GEM.
In addition, the company also inflated its net profit by 66.72 million yuan in 2015, accounting for 60.52% of the disclosed net profit in the current period; In 2016, the inflated net profit was 64.01 million yuan, accounting for 30.64% of the disclosed net profit in the current period; In 2017, the inflated net profit was 78.35 million yuan, accounting for 27.58% of the disclosed net profit in the current period; In 2018, the inflated net profit was 148.27 million yuan, accounting for 38.34% of the disclosed net profit in the current period, resulting in false records in its 2015 annual report, 2016 non-public issuance of shares and payment of cash to purchase assets and raise matching funds and related party transaction report, 2017 public issuance of corporate bonds to qualified investors and 2018 non-public offering of shares listing announcement and other documents.
Prior to this public determination by the Shenzhen Stock Exchange, the China Securities Regulatory Commission had already filed a case for investigation and punishment.
Some shareholders commented that the Shenzhen Stock Exchange's move can be called a "show to the public".
On March 29, *ST Meishang announced the administrative punishment of the company by the China Securities Regulatory Commission, which stated that the CSRC conducted an investigation and trial on the illegal, illegal and fraudulent issuance of *ST Meishang's letter disclosure, and found out that the company's 2015 prospectus, 2015 to 2019 annual report, 2020 semi-annual report, 2016 non-public issuance of shares and payment of cash to purchase assets and raise matching funds and related party transaction report, In 2017, there were false records in the prospectus and other information disclosure documents for the public issuance of corporate bonds to qualified investors.
The main problems are that the inflated net profit was recovered through the early recognition of accounts receivable, and the inflated net profit from 2012 to 2019 totaled 91.58 million yuan; From 2012 to June 2020, the bank recorded interest income by preparing false original vouchers, and a total of 40.73 million yuan was falsely recorded.
did not adjust the project income according to the approved amount, and the net profit was inflated by 220.43 million yuan from 2015 to 2019; In 2017 and 2018, the net profit was inflated by 104.28 million yuan.
The total inflated net profit of the above four projects was 457.02 million yuan.
On the afternoon of May 8, *ST Meishang's sell 1, buy 1, and buy 2 prices had 100,000 hands of large orders and orders. At $0.14, the stock fell only 1 cent from the previous trading day's closing price of $0.15, but the decline was as high as 6.67%, and it fell by 2 cents, a decline of 13.33%.
No self-confession
A number of self-media said that when *ST Meishang was investigated by the regulator, it replied: "We fake the listing, and everything is fake." However, the reporter of "China Business Daily" did not confirm this statement after repeatedly checking the company's announcement, Shenzhen Stock Exchange's announcement, publicity and relevant texts of the China Securities Regulatory Commission. In addition, there has been no official media confirmation of this statement.
On May 7, the reporter called the public phone number of *ST Meishang Securities several times, but no one answered, so it is impossible to further confirm whether its self-admitted fraud is true.
According to the CSRC's administrative penalty decision on the company announced by *ST Meishang on March 29, except for *ST Meishang, the former chairman, general manager, and actual controller Wang Yingyan, and the actual controller Xu Jing did not make a statement or defense opinion on the CSRC's penalty decision, nor did they request a hearing, the other 8 people submitted defense opinions.
Among them, Qian Renyong, then the financial manager and chief financial officer of *ST Meishang, argued that, firstly, he was only authorized to be responsible for accounting, not responsible for fund management, never participated in decision-making on fund-related matters, never obtained the corresponding information of funds, and did not need his signature on relevant bank statements, monthly reports related to project income or audit final accounts. Second, *ST Meishang's 2015 public offering of shares, 2015-2017 annual reports, 2016 non-public issuance of shares, and 2017 non-public issuance of corporate bonds have all exceeded the two-year statute of limitations for administrative penalties. Third, it actively cooperated, providing convenient conditions for the investigation to be carried out. In summary, we sincerely request that the punishment be lenient and commuted.
The defense opinions of the remaining 7 people are also roughly similar to Qian Renyong's opinions, emphasizing that they only participated in part of the fraud, and the administrative punishment of fraudulent listing and fraudulent issuance for more than 2 years took effect, and then they cooperated with the investigation, hoping to be mitigated, mitigated, or even exempted from punishment.
According to this, judging from the regulatory text, *ST Meishang actually did not admit that "we are fake listings, and everything is fake".
According to public information, when *ST Meishang was listed in 2015, Wang Yingyan's shareholding ratio was 48.43%, holding 32.3 million shares. By 2016, the shareholding ratio was reduced to 41.52%, holding 99.87 million shares; In 2017, it held 41.89% of the shares, holding 250.48 million shares.
Since 2019, Wang Yingyan began to reduce her holdings and cash out heavily, and by the first quarter of 2024, only 17.87% remained.
Is it hard to escape the punishment?
The reporter noted that among the 8 people who submitted their defense opinions, 5 emphasized that the CSRC's punishment exceeded the statute of limitations for administrative punishment, but the CSRC believes that the case has the characteristics of continuity and continuation, and the regulatory unit discovered the illegal act no later than June 28, 2020, so the illegal facts involved in the (administrative penalty) notice did not exceed the statute of limitations.
Punishment is hard to escape, and criminal responsibility does not seem to be far away.
In the above-mentioned penalty text, the CSRC stated that the penalized party violated the provisions of Article 13, Paragraph 2 and Article 20, Paragraph 1 of the 2005 Securities Law, which constituted an illegal act of fraudulent issuance under Article 189, Paragraph 1 of the 2005 Securities Law.
Li Qiuyan, a lawyer at Guizhou Guida (Chongqing) Law Firm, told reporters on May 7 that fraudulent issuance and information disclosure are also criminal liability.
She said that according to the Criminal Law (Amendment) deliberated and passed at the 24th meeting of the Standing Committee of the 13th National People's Congress on December 26, 2020, the upper limit of the sentence for fraudulent issuance was increased from 5 years to 15 years in prison, and the upper limit of the sentence for those responsible for information disclosure and falsification was increased from 3 years to 10 years.
The amendment also clarifies that the sponsor is the subject of the crime of providing false supporting documents and the criminal subject of the crime of issuing material misrepresentation of supporting documents, and the criminal liability shall be applied to this crime. At the same time, for lawyers, accountants and other intermediary personnel who issue false supporting documents in securities issuance or major asset trading activities, and the circumstances are particularly serious, a higher level of imprisonment is clearly applied, and the maximum sentence is 10 years imprisonment.
On the evening of July 17, 2023, GF Securities announced that the company received the "Advance Notice of Administrative Punishment" from the China Securities Regulatory Commission. GF Securities is suspected of failing to be diligent in providing sponsorship (lead underwriting) services for Meishang Ecology's non-public issuance of shares in 2018, issuing documents containing false records, ordering GF Securities to make corrections, giving warnings, and fining a total of 10,216,980 yuan.
On July 14 of the same year, *ST Meishang received the "Administrative Penalty Decision" from the China Securities Regulatory Commission, and was fined 13.3 million yuan for fraudulent issuance, illegal information disclosure, etc., and Wang Yingyan, the then chairman and actual controller, was fined 15.1 million yuan for illegal information disclosure, and was banned from the securities market for life.
On February 22, 2024, *ST Meishang announced that the China Securities Regulatory Commission (CSRC) had manipulated the stock price of *ST Meishang with 113 securities accounts with 113 securities accounts between June 12, 2018 and July 3, 2020, with a trading volume of nearly 80 billion yuan and a final loss of 237 million yuan. The China Securities Regulatory Commission (CSRC) imposed administrative penalties on Wang Yingyan and Ji Yun, the legal representative of the private placement, and fined them 5 million yuan and 3 million yuan respectively.
(Editor: Hao Cheng Review: Wu Kezhong Proofreader: Zhang Guogang)