Dan Dong Xin Tai Electric becomes first to be delisted over IPO disclosure
Sponsor and underwriter Industrial Securities also fined 30 million yuan, and has its fees of 32.78 million yuan confiscated
China’s securities regulator on Friday announced the first mandatory delisting of a company due to fraud in an initial public offering.
Dan Dong Xin Tai Electric, based in northeast China’s Liaoning province, is being forced out of China’s Nasdaq-style ChiNext board, a month after it received a notice from the China Securities Regulatory Commission (CSRC) warning it may be delisted for providing misleading information in its IPO prospectus, and for breaching other disclosure rules.
The CSRC has started the mandatory delisting of Xin Tai and the company cannot now reapply for a listing, said Zhang Xiaojun, a spokesman for CSRC. It has to repay investors in the IPO.
Industrial Securities, the sponsor and underwriter of the IPO, is also being fined 30 million yuan (HK$34.91 million), and its fees from the listing, worth 32.78 million yuan, will be confiscated.
“The fraud-ridden IPO of Xin Tai breached the bottom line of integrity and disrupted the normal order of the capital markets.
“The market has no tolerance for this kind of company, and has to clear them out,” Zhang said.
“The CSRC will implement the necessary regulatory and law enforcement measures comprehensively, to maintain market order and boost its healthy development,” he said.
Wen Yide, the chairman of Xin Tai, said he would file for bankruptcy after the delisting, 21st Century Business Herald reported.
Xin Tai filed its IPO application in November 2011 and debuted on the Shenzhen bourse in January 2014, according to public records.
An investigation by the CSRC found Xin Tai falsified its financial accounts from 2011 to 2013.
Following its listing, Xin Tai then continued to submit false information and failed to disclose a 63.88 million yuan loan from the company for personal use, the CSRC filing said.