Delisting cannot escape accountability, “zero tolerance” combats fraudulent securities issuances
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Recently, Amethyst Storage announced that the company’s actual controller and persons acting in concert with the actual controller were suspected of fraudulent issuance of securities and had been arrested by the local prosecutor’s office.
Amethyst Storage has previously been forced to delist due to fraudulent issuance and information disclosure violations. Even if they are delisted, they cannot escape accountability, which demonstrates the “zero tolerance” attitude of the regulatory authorities towards fraud in the capital market and reflects the regulatory authorities’ determination to remove companies that do not meet the issuance conditions from the market.
It does not meet the issuance requirements, but it defrauds issuance qualifications through financial fraud, whitewashing performance and other evil means to achieve the purpose of listing and financing. This kind of intentional fraud from the source has been repeatedly banned in the A-share market, and profit motivation is the key. Compared with the amount of financing that can easily reach hundreds of millions or billions after a successful listing, the cost of counterfeiting is low, and there is a sense of luck that it will not be easily discovered. Even if the regulatory authorities repeatedly order not to issue fraudulent products, some companies still take risks.
A healthy capital market should not allow fraudulent issuance and chaos to exist. The capital market is a place for investors to find valuable investment targets and to provide high-quality listed companies with “living water” of funds. If the packaged “good companies” are allowed to slip through, the market may evolve into a place for fraudsters to make money. Becoming a casino for speculators’ disorderly speculation not only harms the interests of investors, but also disrupts the order of the capital market and even endangers the security and stability of the entire financial market.
To achieve “zero occurrence” of fraudulent issuances, companies must make a clear calculation: once the legal “red line” is crossed, the price paid will be much higher than the benefits gained from fraud. In recent years, regulatory authorities have maintained high pressure on fraudulent issuances and have continuously increased the illegal costs of fraudulent issuances. The Criminal Law Amendment (11), which will take effect on March 1, 2021, will increase the maximum sentence for fraudulent issuance from 5 years to 15 years in prison. The market expects that the crackdown on fraudulent issuances will be further intensified in the future to enhance the deterrent effect against fraudsters and to eliminate the root causes and retain the essence.
To make fraudulent issuances invisible, supervision levels need to be continuously improved. Judging from the disclosures by regulatory authorities, fraudulent issuance methods are often complex and concealed, and there are many types of entities involved. This requires strengthening daily supervision and strengthening all-round accountability. On the one hand, it is necessary to promptly investigate and deal with fraud through the regular use of audit inquiries, on-site supervision and other means to make it difficult for lawbreakers; on the other hand, it is necessary to continue to improve the three-dimensional accountability system of administrative law enforcement, civil compensation, criminal punishment, etc., and to deal with fraud Every illegal subject in the issuance chain will be held accountable, and any illegal behavior will never be tolerated.
What is fake can never be true. In the context of zero tolerance, no matter how clever the fraud is, the “paint” of hypocrisy will eventually be torn off. Companies planning to be listed should learn the lessons of Amethyst Storage, abide by the rules, follow the right path, and enter the capital market with “real skills”. As gatekeepers of the capital market, intermediaries should always be diligent and responsible, do their best to screen out high-quality companies and keep junk companies out, guard the bottom line of integrity in the capital market, and control the quality of the stock market.
A true information environment, high-quality listed companies, fair trading opportunities…all factors are indispensable to build a standardized, transparent, open, dynamic and resilient capital market. Only in this way can we truly enhance market activity and boost investor confidence, thereby better utilizing the investment and financing functions of the capital market and serving the high-quality development of the real economy.
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