LeTV, which has been delisted from the A-share market, and Jia Yueting, the company’s de facto controller, received a fine totaling more than RMB 480 million from the Beijing Securities Regulatory Bureau yesterday. LeTV has been accused of 10 consecutive years of financial fraud, setting a record for A-share fraud fines; a China Securities Regulatory Commission official was also prosecuted for bribery during the period. It has been more than three years since Jia Yueting avoided the United States after LeEco’s financial crisis in 2017, and it is a big question how he will be able to repay the 241.2 million yuan in fines levied against him.
China’s LeTV has been accused of 10 consecutive years of financial fraud, and the company’s de facto controller Jia Yueting received a fine of more than RMB 480 million from the Beijing Securities Regulatory Bureau on the 13th, a record fine for A-share counterfeiting. According to a report by the Central News Agency today, LeTV initially focused on network films, film production and distribution, and terminal applications, and the group later also crossed over into different fields such as e-commerce and car manufacturing. LeTV announced in the evening of the 12th that it received an administrative penalty decision from the Beijing Securities Regulatory Bureau on the same day, fining LeTV a total of RMB 240.6 million, Jia Yueting a total of RMB 241.2 million and other related individuals a total of RMB 2.07 million for the company’s financial fraud and fraudulent issuance violations.
Leshi was accused of financial fraud for 10 consecutive years from 2007 to 2016, and its IPO filing materials and annual reports from 2010 to 2016 filed and disclosed false records; failure to disclose connected transactions as required; failure to truthfully disclose the fulfillment of loan commitments by Jia and others to the listed company; and the conduct of non-public offering of shares in 2016 constituted fraudulent issuance, etc.
After the listing of LeTV in September 2010, including the IPO, a total of about 5.73 billion yuan was raised through public offerings and fixed increases. Leshi received a termination notice from the Shenzhen Stock Exchange on May 14, 2020, entered the delisting period for trading in June of the same year, and transferred to the National Small and Medium Enterprises Stock Transfer System (New Third Board) in February this year.
According to a report by China First Financial, the long span of 10 consecutive years of financial fraud is unique in the history of A-shares; even if we only count the period after the listing, the period of financial fraud is as long as 7 years. The total fine of nearly $500 million is also the highest in A-share financial fraud fines. The newspaper said LeShi’s financial reports were questioned by experts in 2015 for falsification, but denied by LeShi. However, with LeShi’s IPO when a number of members of the current issuing and review committee, regulatory officials have fallen, making LeShi’s “listed with disease” allegations more difficult to clear.
In December 2014, the former director of the Investor Protection Bureau of the Securities and Futures Commission (SFC), Li Quan, was indicted. Li was accused of accepting bribes totaling 6.936 million yuan during his tenure as director of the issuance review department and deputy director of the issuance supervision department of the GEM of the SFC, and providing assistance to nine companies, including LeTV, in their applications for public offerings or listings. Xie Zhongping, Sun Xiaobo and other members of the issuance committee involved in the IPO of LeShi, were also taken away for investigation into 2017.
The report pointed out that before Leshi, Jinya Technology, Xintai Electric and other companies have been held criminally liable for financial fraud and fraudulent issuance, and there is considerable concern about whether Jia Yueting will have criminal liability in the future. In addition, since LeShi’s capital chain broke crisis in 2017, Jia Yueting avoided the United States, it has been more than 3 years, how he is going to be able to repay the 241.2 million yuan that was fined against him is also a major problem.
Recent Comments