Recently, the Shanghai Financial Court issued a notice to uncover a case of a single shareholder class action lawsuit against a listed company and its intermediaries, which is of great significance, because he did not initiate a public interest lawsuit for claims by the insurance center under the China Securities Regulatory Commission, but directly initiated a lawsuit with the court on behalf of small and medium-sized investors by lawyers, which is rare in mainland China, and is also one of the legal ways to recover investment losses with reference to shareholders.
The defendant protagonist is Huichen Co., Ltd. (688500.SH), and shareholders sued it for fraud, false listing, false statements, and intermediaries that counseled it to go public in 2020, including sponsor CITIC Securities and audit firm PricewaterhouseCoopers. This type of prosecution is a typical American-style shareholder class action lawsuit, and it is hoped that this method can quickly help shareholders recover their losses and quickly conclude the trial.
Now Huichen shares (688500.SH) have not been ST, because they have been punished by the regulatory authorities before the new regulations, so they have escaped, but their violations of the law are also very bad. In response to the Securities Law and related amendments to the Criminal Law, the penalty for the crime of fraudulent issuance of shares is imprisonment of not more than 5 years and a fine of 1%-5% of the amount involved. But who would have thought that what would be the final penalty for listed companies?
Huichen shares will be listed in 2020, and they will also be listed on the Science and Technology Innovation Board, which is currently more controversial. The regulator found that 60% of the company's net profit of 100 million yuan before listing, that is, 60 million, was obtained through fraudulent means to generate so-called false contracts, false transactions and false income with subsidiaries. Of course, after the listing, it couldn't be hidden, and it continued to lose money for two consecutive years, and was finally investigated and punished in 2023, and administrative penalties were imposed.
The result of the punishment also surprised everyone, a number of directors, supervisors, senior executives, and general managers of Xintang Puhua of listed companies were fined a total of 16 million yuan, and there was no extended punishment for these intermediaries. After that, the shareholders began to claim compensation, eventually embarked on a class action lawsuit, and now have finally succeeded in taking the two intermediaries and the listed company together in the dock.
Regulatory penalties are relatively light, but in fact, if they are placed in mature economies, the penalties may be completely different. The best reference case is the fraud case of Enron, a listed company in the United States, the final punishment is the delisting of the company, a fine of 500 million US dollars, the company's CEO is sentenced to 24 years in prison and a fine of 45 million, and other counterfeiters are either imprisoned or heavily fined. The audit company Arthur Andersen eventually went bankrupt, and the three investment banks responsible for the listing business paid a total of nearly 4.3 billion in compensation. Shareholders received nearly $7.14 billion in settlement damages.
Compared with the case of Enron, and then looking at the fraud of Huichen shares, the corresponding securities law and related amendments to the criminal law, etc., it is completely possible to put the relevant responsible person in prison, and it is completely possible to impose a maximum and heavy fine, not just 16 million yuan. With such a clear nature of fraud and fraudulent listing, why didn't the insurance center replace small and medium-sized investors and file a lawsuit early by subrogation?
However, now mainland financial lawyers have also begun to start, and have also begun to carry out class action lawsuits on behalf of shareholders, rather than relying only on the insurance center to act as a public interest lawsuit on behalf of the insurance center.
This time, a number of plaintiffs such as Li Moumou, Qiao Moumou, and Zhu Moumou entrusted a lawyer to sue CITIC Securities, Huichen Shares, and PricewaterhouseCoopers on the basis of false statements. In fact, because the company is listed on the fraud, then theoretically, from the first day of the company's listing, investors who enter can sue for compensation. You still have to rely on yourself to fight for your own rights and interests.
#慧辰股份被罚 The sponsoring auditor becomes the defendant#