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Investor Protection Case - listed the fight against fraud

source:Original    time:2016-09-13     Pageviews:647

Hail Health Branch fraud issue and the relevant agencies the case of illegal
According to the inspection of listed companies found clues, September 14, 2012, the Commission of the Hail Health Branch (Hunan) Agricultural Development Joint Stock Company (hereinafter referred to as Edmond Health Division) suspected of financial fraud and other illegal behavior record for audit. The case is the first case of the GEM companies issued stock fraud case. Edmond Health Division issuing and listing process, the sponsor Ping An Securities, the audit institution Lei accounting firms and law firms and other Hunan Boao three intermediaries and the responsible officers allegedly not due diligence, the existence of false records issued by the relevant material, were subsequent criminal investigation.
These cases administrative investigation has been terminated. April 2013, the Commission will Edmond Health Division and two people suspected of crimes transferred to public security organ for handling. Relates to administrative punishment part, it has entered into administrative punishment prior notice stage. Next, the Commission will be in accordance with legal procedures, to make a formal decision on punishment.
First, Edmond Health Division issued stock fraud and illegal information disclosure
(A) Section Hail students' initial public offering and listing on the GEM prospectus "of 2008-2010 financial data disclosed false records.
The investigation, Edmond Health Division in order to achieve public offering and listing conditions, according to chairman and general manager Gong Yongfu decisions and by the Chief Financial Officer Tan Xuejun arrange execution, Edmond Health Division in 2008-2010 were inflated sales income of about 120 million , 15,000 yuan, 19,000 yuan, inflated operating profit of about 2,851 yuan, 3,857 yuan, 4,590 yuan.
(Ii) Hail Health Branch 2011 annual report, there is a 2012 semi-annual report of false records.
The investigation, in the above financial data in their annual reports in 2011 and 2012 semi-annual disclosure of inflated sales income 28,000 million and $ 16,500 million, inflated operating profit of 6,635 million and $ 3,435 million.
(C) Discontinued Edmond Health Division did not perform timely report on the matter in the first half of 2012, announcement obligation, nor be disclosed in the 2012 semi-annual report.
Hail the above acts of violation of the Health Section "Securities Law" and other relevant laws and regulations, constitute the "Securities Act" Article 189 of the "issuer does not meet the conditions of issue, with the approval issued by deception" and section 193 of the "issuers, listed companies or other information disclosure obligations in accordance with the provisions of undisclosed information, or the information disclosed is false, misleading statements or material omissions" behavior. Among them, the Hail Health Branch, Gong Yongfu, fraud and issuing false records of suspected criminal behavior Qin Xuejun, has been transferred to public security organs held criminally responsible. According to the relevant provisions of the "Securities Law", the Commission intends to be ordered to correct violations Edmond Health Division, given a warning, impose a 30 million fine; for Gong Yongfu given a warning and imposed a fine of 300,000 yuan; while the other 19 Yanping Gui executives be given a warning and imposed a 250,000 to 50,000 yuan fine. In addition, to be on Gong Yongfu, Qin Xuejun take lifelong securities market exclusion measures.
Second, the relevant agency is not due diligence
The investigation, Ping An Securities in Edmond Health Division The Listing sponsorship, no prudent examination of other agency issued opinions; fails to perform due diligence on real business Hail raw financial data and various subjects during the reporting period, careful verification obligations; not according to the law Edmond Health Division continued to perform supervisory accountability; internal control system can not effectively implemented. False record which issued a "sponsorship letter issued" continuous supervision and reporting. Ping An Securities such acts, in violation of the relevant provisions of the "Securities Law" and other laws and regulations, constitute the "Securities Act" Article 192 "Securities Issuance and Listing Sponsor business management approach" the case Article 67. The Commission intends to take the following administrative penalties and administrative regulatory measures and related personnel Ping An Securities: The Ping An Securities given a warning and confiscate its revenue Edmond Health Division of IPO issuance 2,555 yuan, and impose a fine of twice suspend its sponsor qualification 3 months; Understanding and explanation of the sponsor representative, He Tao were given a warning and fined 300,000 yuan, sponsor representative qualifications revoked, the revocation of securities qualification, take lifelong security market measures; to sponsor business person in charge, the kernel Xue Rong, head of years, and had been born Cui Ling were given a warning and fined 300,000 yuan, shall revoke its securities qualification; to co-sponsor the project to give people Tang Dezhi warned and fined 100,000 yuan, the revocation of securities qualification.
Lei accounting firms in issuing and listing Edmond Health Division of Audit and the 2011 annual report of the audit, no due diligence, lack of audit procedures, the presence of misconduct in terms of acquisition and the formation of the audit opinion of the audit evidence, the audit report issued presence false record. The above acts of the Institute, in violation of the relevant provisions of the "Securities Act" and other laws and regulations, and regulations constitute the legal situation of the "Securities Act" Article 223 and the like. It intends to confiscate Lei accounting firms revenue 1.38 million yuan, and impose a fine of 2 times, revoke its securities business license. The signature accountant Wang Yue, Placid given a warning, and were at 10 million, a fine of 130,000 yuan, the securities market exclusion measures are taken for life. The signature accountant Zou Hongwen given a warning, impose a fine of 30,000 yuan.
Hunan Boao law firm to provide legal services for issuing and listing when Edmond Health Division, did not perform according to inspection and verification obligations, failed diligence, legal opinions issued by the false records, in violation of the relevant "Securities Act" and other laws and regulations provisions, constitute the "Securities Act" Article 223 of the case. According to the relevant provisions of the "Securities Law" and other laws and regulations, the Commission intends to confiscate Boao law firm revenue 700,000 yuan, and impose a fine of 2 times, and do not accept any special document issued by the issuer within 12 months; intends to signature lawyer Yan, Hu Yun given a warning, and were sentenced to a fine of $ 100,000 and take lifelong securities market exclusion measures.
Hail Health Branch of violation cases investigated, the Commission adhere to strict law enforcement, serious accountable. The case against the illegal facts, strict application of the relevant penalties, to be imposed pause sponsor business qualifications and "not a penalty two" administrative penalties for the sponsor. And severely punish illegal, serious accountability at the same time, in order to maximize the protection of the interests of investors, so the loss of support in favor of the investors receive compensation as soon as possible to explore the essence.
Hail Health Branch case highlights the relevant issuers and intermediaries weak sense of integrity, ethics seriously flawed, both violate basic information disclosure requirements and market "Three" principle, but also seriously damaged the interests of investors, the relevant issuers, intermediaries institutions and the persons responsible will be prosecuted both criminal or administrative liability.
Sponsor, accountants, lawyers and other intermediaries bear responsibility for prudential supervision of the issuer verification and standardized operation, the level of integrity and quality of practice for improving the quality of listed companies from the source, and promote stable and healthy development of capital markets has an irreplaceable role. Intermediary institutions should strictly follow the "Prospectus Guidelines", "Enterprise Accounting Standards", "sponsor due diligence guidelines" requirements and other regulations and policies, earnestly fulfill their legally assumed responsibility, diligence practice, make great efforts to pay close attention to the quality of the sponsor. First, we must strictly abide by traffic rules and industry standards, to maintain a reasonable professional skepticism, the full implementation of the due diligence process for practicing the problems in a comprehensive sort and serious rectification, strictly prevent profit manipulation, fraudulent issuance risk. Second, the business processes and job descriptions from various aspects of the comprehensive risk control system requires reinforce the internal control responsibilities for duty, down to the people, through a declaration in among every project, risk control to prevent "skimming." Third truly improve internal accountability mechanisms. Agency primarily responsible to assume management responsibilities, from project selection, project feasibility studies, providing raw materials, due diligence and other links, each link signature project personnel are to be held accountable. Each agency to manage their people, strengthen internal supervision and inspection for irregularities occurred during practice recommendation, active clean house, to remove "black sheep."
Fraud issue, financial fraud and other acts of serious harm to the legitimate rights and interests of investors, undermining the credibility of the capital market, the capital market is a malignant tumor. China Securities Regulatory Commission will continue to deepen in the information disclosure as the center of IPO reform, effectively promote the homing responsible parties, in particular, to increase the focus on the issue of illegal misconduct fraud, financial fraud, false disclosure of punishment. First, from the starting point declaration, issuers and intermediaries that is, to bear the corresponding legal responsibility. In the declaration to all aspects of the market, if found illegal important clue, immediately start third-party verification, inspection department of the transfer and other related measures, was found severely dealt with. The second is to strengthen the agency sponsors, underwriters and accountants supervision and inspection, law practice of the relevant agency found not in place due diligence, information disclosure irregularities, financial fraud and other acts, will be provided in a timely manner, shall be punished severely. For those responsible, once identified responsibility, regardless of their work status and whether the changes can not be relieved of the liability to be borne. Third, the revision and improvement of existing rules, issuers and sponsors to further clarify the mechanism, accountants, lawyers and relevant market participants responsibility and accountability mechanisms to recover refinement violation penalties. While urging institutions to strengthen self-discipline for violations of discipline punishment. Fourth, the executive accountable and punished, while actively promoting the implementation of civil compensation mechanism.
Hail Health Division of the SFC investigation process of the case, the sponsor Ping An Securities launched on the eligibility of investors first compensation scheme, Edmond Health Division and the actual controller Gong Yongfu Yang Ronghua couple promised to bear the compensation according to the law should share, and the 3,000 shares of stock pledged to Hail Health Branch of China Securities Investor protection Fund limited liability company management, as a fulfillment of liability guarantee. Meanwhile, Wan Health Division during the investigation I will take the initiative to disclose their illegal circumstances and actively cooperate with the investigation. Edmond Health Division and its sponsor Ping An Securities initiative to fulfill eligibility of investors first compensation obligations, and actively take measures to correct its illegal behavior, mitigate the negative impact on the market. According to the Shenzhen Stock Exchange GEM Stock Listing Rules, and after the Commission on Health Branch Hail to make administrative punishment, the Shenzhen Stock Exchange will eliminate the conditions and in accordance with the Administrative Punishment Opinion Edmond Health Division of the consequences of illegal acts, shall be dealt with in accordance with regulations. From the current situation, in accordance with the relevant provisions of the "Securities Law" and "the Shenzhen Stock Exchange GEM Stock Listing Rules" the Hail Health Division will not touch delisted conditions.
China Securities Regulatory Commission to encourage the use of market-based mechanisms to protect investors' legitimate rights and interests, subject to the illegal market to compensate investors for losses initiative first adopted a positive attitude. Hope the community will continue to care, support the development of the capital market, the parties to work together to further improve the transparency of capital markets, capital market and maintain fairness and justice, to promote the healthy and stable development of the market.
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