What happened
An administrative penalty decision published by the China Securities Regulatory Commission (CSRC) on Sept. 4 shows that *ST Yuandao (301139.SZ) has been fined 238.84 million yuan for fraudulent securities issuance and illegal information disclosure. The company has triggered the conditions for compulsory delisting for major violations, and the Shenzhen Stock Exchange has issued an advance notice saying it intends to terminate the listing. Trading in the shares has been suspended since Aug. 31.
According to the penalty decision, the company repeatedly submitted prospectus drafts from Oct. 2020 through mid-2022 and fabricated revenue in the reporting period of 2019-2021 by using fictitious work-volume confirmations. Inflated revenue for these years reached 65.9 million yuan, 161 million yuan, and 264 million yuan, representing 8.75%, 13.12%, and 16.23% of the revenue in the offering documents. The practice continued in 2022, with an extra 166 million yuan in fake revenue, or 7.87% of the annual report's revenue.
Former chairman Li Jin was fined 7.5 million yuan and given a five-year market ban; finance chief Cao Yalei was fined 6 million yuan and banned for four years; and director Wu Zhifeng was fined 3 million yuan. A fourth individual, identified by the surname Yan, was exempted because he is deceased.
Why it matters
The case highlights a broader regulatory push for full-chain accountability. The fine comes on the heels of another delisted company whose actual controller was criminally detained, signaling that enforcement does not stop at a listing termination.
As commentators cited in Time Weekly note, even if a company exits the main board, the entities and individuals behind historical disclosure violations still have to answer for them. Such a closed-loop approach may help counter the market's 'one delisting ends it all' mindset.
Key facts
The CSRC fined *ST Yuandao 238.84 million yuan for fraudulent issuance and information disclosure violations.
From 2019 to 2021, the company overstated operating revenue by 65.9 million, 161 million, and 264 million yuan, respectively; in 2022, it overstated revenue by another 166 million yuan.
Li Jin was fined 7.5 million yuan and banned for five years; Cao Yalei was fined 6 million yuan and banned for four years; Wu Zhifeng was fined 3 million yuan.
The Shenzhen Stock Exchange has given notice that it plans to terminate the listing; shares have been suspended since Aug. 31.
The company cancelled its 2025 profit distribution plan due to frozen accounts, and now plans no cash dividends, bonus shares, or capital reserve conversion.
What to watch next
Investors will be watching for the Shenzhen Stock Exchange's formal delisting decision, which would likely end the company's trading status on the main board.
The company's liquidity and operations remain under stress, with cash balances down to 47 million yuan, negative operating cash flow, and termination of key contracts with customers such as China Mobile and China Tower, raising questions about its viability beyond the delisting process.