Penalties Landing Densely: 7 Stocks Penalized in a Single Week, Cracking Down Hard on Financial Fraud

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Since the beginning of the year, fines imposed on listed companies (including administrative penalty decisions and prior notices) have been rapidly increasing. Beijing Business Daily reporters note that during the week of March 16–20 alone, seven listed companies such as Yahui Long (rights protection), Kechuang Information (rights protection), and ST Dongshi (rights protection) received administrative penalty decisions or prior notices. Along with these seven companies being fined, the total number of listed companies receiving fines this year has reached 24. The main reason for penalties is violations of information disclosure laws and regulations. Among these, financial fraud is a major issue, with multiple companies like *ST Mubang (rights protection) and ST Dongshi involved in false financial data disclosures. Additionally, from a fundamental perspective, nearly 80% of these 24 companies are expected to report losses in 2025.

Seven companies received fines in one week

According to Tonghuashun iFinD statistics, during the week of March 16–20, seven listed companies were fined: *ST Mubang, ST Mingcheng (rights protection), Yahui Long, Kechuang Information, ST Dongshi, Yingji Core (rights protection), and *ST Xingnong (rights protection). Specifically, the disclosures from these companies mainly occurred on March 17 and 20.

On March 17, Yahui Long and Kechuang Information received administrative penalty decisions, while *ST Xingnong and Yingji Core received prior notices; on March 20, *ST Mubang and ST Mingcheng received fines, and ST Dongshi received a pre-fine notice.

The main reason for the investigations was violations of information disclosure laws. Among these seven stocks, Yahui Long and Yingji Core were fined for riding the wave of the “brain-computer interface” hot topic.

Specifically, on March 17, Yahui Long received an administrative penalty decision from the Shenzhen Securities Regulatory Bureau, which ordered the company to correct its violations, issued a warning, and fined 4 million yuan; the chairman Hu Kunhui and secretary Wang Mingyang received warnings and fines. Notably, it took just over a month from the start of the investigation to the issuance of the penalty decision.

On the same day, Yingji Core received a prior notice from the Shenzhen Securities Regulatory Bureau, which proposed warnings and a 4 million yuan fine for the company, along with warnings and fines for relevant personnel.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, told Beijing Business Daily that current regulatory trends indicate that the capital market has entered a phase of “strict regulation, heavy accountability, zero tolerance.” Listed companies must adhere to compliance as a bottom line, strengthening internal controls and the quality of information disclosure. For non-compliant companies, administrative penalties are just the beginning; they may face investor claims, business contraction, and other impacts. Investors should also be cautious of valuation collapses caused by historical issues in ST and *ST companies, prioritizing targets with transparent governance and solid finances.

24 companies fined this year

Since 2026, the China Securities Regulatory Commission (CSRC) has issued fines or pre-fines to many A-share listed companies.

As of now, 24 listed companies have been fined or are under investigation this year. Among them, 16 companies such as *ST Mubang and Yahui Long received administrative penalty decisions; another 8 companies, including ST Dongshi, Sunflower (rights protection), and *ST Haqian (rights protection), received pre-fine notices.

Looking at the months when fines and pre-fines were issued, in January, February, and March, the number of companies receiving administrative penalty decisions or notices was 8, 7, and 9 respectively.

According to Tonghuashun iFinD data, none of these 24 companies have disclosed their 2025 annual reports yet, but they have released performance forecasts or semi-annual reports. However, nearly 80% are expected to report losses in 2025.

Specifically, 19 companies are projected to incur losses in 2025. Based on the upper limit of net profit forecasts, Bayi Steel (rights protection) is expected to have the largest loss, with an estimated net profit attributable to shareholders of about -2.05 billion to -1.85 billion yuan; second is *ST Mubang, with an expected loss of 660 million to 930 million yuan; followed by ST Dongshi, with an estimated loss of 600 million to 700 million yuan; the remaining 16 companies are forecasted to have losses below 600 million yuan.

Among these 24 companies, 7 are ST stocks: ST Dahua (rights protection), ST Dongshi, ST Mingcheng, ST Funeng (rights protection), ST Erya (rights protection), ST Huilun (rights protection), and ST Jingji; 4 are *ST stocks, including *ST Likuang (rights protection), *ST Haqian, *ST Mubang, and *ST Xingnong; additionally, one company, Changyao, has entered the delisting restructuring period, also rights protection.

In terms of industry sectors, the computer industry accounts for the most stocks with five; power equipment has four; pharmaceutical and biological industries have three; electronics and machinery each have two; the rest belong to various other industries.

“Fighting” financial fraud

Since the beginning of this year, the CSRC has been cracking down comprehensively on financial fraud. Chairman Wu Qing mentioned at the Fourth Session of the 14th National People’s Congress that efforts are being accelerated to promote regulatory digitization and intelligence, precisely and effectively combat financial fraud, market manipulation, insider trading, and other serious violations, continuously improve the investor rights protection system, and enhance investors’ sense of gain.

According to incomplete statistics by Beijing Business Daily, among the stocks that received fines or pre-fines this year, many, including *ST Likuang, *ST Mubang, ST Dongshi, and ST Mingcheng, were fined for reasons related to financial fraud.

The latest fine issued to *ST Mubang shows that on the evening of March 20, the company announced that it and related parties received an administrative penalty decision from the Jiangxi Securities Regulatory Bureau.

The decision states that, after investigation, the Jiangxi Securities Regulatory Bureau found that in 2023 and the first half of 2024, *ST Mubang’s subsidiary Inner Mongolia Haoan and its subsidiary Jiangxi Jierui Electromechanical Equipment Co., Ltd. artificially inflated revenue by about 516 million yuan and 198 million yuan respectively, through fictitious silicon material sales and fake single-crystal furnace sales. These actions resulted in inflated total profits of approximately 159 million yuan and 74.99 million yuan.

These behaviors caused *ST Mubang to artificially inflate revenue by 31.17% and 45.49% in 2023 and the first half of 2024, respectively, and to inflate total profits by 536.6% and 46.5% during those periods. The company’s disclosed 2023 annual report and 2024 semi-annual report contain false records.

Yuan Shuai, Deputy Secretary-General of the Zhongguancun Internet of Things Industry Alliance, said that the frequent issuance of fines to listed companies signals the deep implementation of the “zero tolerance” enforcement concept and the strengthening of comprehensive regulatory oversight. The capital market is entering a new cycle focused on cracking down on financial fraud and improving disclosure quality. This enforcement rhythm helps break the illusion of financial fraud, establish a multi-layered accountability system including administrative penalties, civil compensation, and criminal responsibility, and reshape the market ecosystem. It also elevates the protection of investors’ right to know and choose. Furthermore, it clearly defines the regulatory bottom line: regardless of a company’s operational status or listing location, once it breaches disclosure rules, it will face strict legal penalties. This consistent expectation helps guide listed companies to focus on their main businesses, reduce speculative financial tricks, and promote the effective operation of market selection mechanisms.

Source: Beijing Business Daily

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