Chinese Regulator Probes Six Companies in IPO Fraud Crackdown
(Bloomberg) -- The China Securities Regulatory Commission said Friday it’s investigating six companies over alleged wrongdoings related to initial public offerings and disclosures.
Longbao Ginseng & Antler Co., which is applying for a listing, is among the companies, the CSRC said in a statement posted on its official Weibo account. The five other companies, which have already gone public, are Guangdong Guangzhou Daily Media Co., Ingenious Ene-Carbon New Materials Co., Infotmic Co., P2P Financial Information Service Co. and Shenzhen Ecobeauty Co. The six are the fist batch of cases announced following the start of a CSRC enforcement campaign targeting IPO frauds.
Chinese regulators have stepped up supervision of IPOs this year. The regulator told brokerages in July to do better due diligence on prospective clients when arranging initial public offerings, secondary share sales and bond issues, people with direct knowledge of the matter said at the time, and vowed to punish rule breakers. The agency started a compulsory delisting of Dandong Xintai Electric Co. after finding the company gave false financial data in its 2011 IPO application, as well as annual and semi-annual reports from 2013 to 2014.
The CSRC will “persistently keep the high pressure” on IPO and information disclosure-related violations, it said in Friday’s statement.
The alleged wrongdoings in the six cases include false representation in IPO prospectuses and fabrication of revenue and net income. The regulator will also go after intermediaries including underwriters, auditors and lawyers, it said in the statement.
With assistance from Gary Gao