Ruixing coffee, which is listed in the United States, opened down more than 15% on the 6th after a fake transaction of 2.2 billion yuan. In sharp contrast, the U.S. stock market continued to rise on that day, with the three major stock indexes all up more than 5%.
On the night of April 2, less than an hour before the US stock market opened on that day, Ruixing coffee suddenly released a news that the companys investigation showed that the companys COO (chief operating officer) and individual employees had forged transactions worth about 2.2 billion yuan. As soon as the news came out, the intraday trading of Ruixing coffee stock triggered eight circuit breakers, and investors panicked to sell. On the morning of Friday, Lu Zhengyao, chairman of Ruixing coffee, said in the wechat circle of friends that I am very self reproach for Ruixing coffees suspected financial fraud of 2.2 billion yuan. On the same day, Ruixing coffee issued a statement of apology for the forgery, saying that the companys executives and employees involved had been suspended for investigation.
A number of legal professionals believe that Ruixings fraud may trigger the investigation of the CSRC, the CSRC may open a criminal investigation against the company and relevant responsible personnel together with the Ministry of justice, and the collective action and the CSRCs fine may lead to the companys bankruptcy. Still have lawyer rough calculate, once face class action, lucky will face total about 11.2 billion dollar compensation.
Dong Dengxin, director of the financial and Securities Research Institute of Wuhan University of science and technology, agreed with the statement that Ruixings fraud may trigger the investigation of the CSRC on June 6 in an interview with the global times. He believes that if the investigation proves that Ruixing coffee counterfeiting has reached a serious level, the executives involved in the signing of documents will face corresponding punishment, the punishment for individuals can be up to $5 million, and if criminal proceedings are involved, in the most serious cases, they may be sentenced to 20 to 30 years imprisonment. Dong Dengxin said that the degree of marketization of the US delisting system is very high, and it is not necessary to go through the CSRC or NASDAQ. As long as its share price drops below $1 per share and lasts for 30 trading days, it will be unconditionally delisted. According to Dong Dengxin, in 2010, zhonggai shares were short in batches by American institutions, and the reputation of zhonggai shares was ruined at that time. Ruixings fraud may hit other Chinese stocks listed in the US even harder.
Source: editor in charge of Global Times: Wang Fengzhi_ NT2541