The relevant data of K Company is suspected of fraud, and the indicators to measure whether the IPO is fraudulent should also be more inclusive.
Recently, the Shanghai Stock Exchange issued four tickets, all pointing to the IPO project of K Company. For reasons such as inaccurate disclosure of information related to scientific and technological innovation attribute indicators, and relevant data no longer meet the conditions of scientific and technological innovation attribute indicators after deduction, the Shanghai Stock Exchange decided to circulate a notice of criticism to K Company. Personally, I think that the relevant data of K Company is suspected of fraud, and the indicators to measure whether the IPO is fraudulent should also be more inclusive.
On June 15, 2023, Company K submitted the application documents for listing on the Science and Technology Innovation Board to the Shanghai Stock Exchange. In July of the same year, it was inquired and the first round of reply was made in October. But on February 20 this year, K Company withdrew its IPO application documents. However, due to the existence of illegal acts, the company was still criticized in a notice of punishment.
The Science and Technology Innovation Board, which launched the pilot registration system, has not only set five sets of listing standards, but also the enterprises to be listed on the Science and Technology Innovation Board must have certain science and innovation attributes. The content mainly involves the proportion of R&D investment in revenue in the last three years, or the cumulative amount of R&D investment in the last three years must meet certain standards; The proportion of R&D personnel in the number of employees. If the sci-tech innovation attribute is not up to the standard, of course, it is impossible to list on the sci-tech innovation board.
According to the investigation of Shanghai Stock Exchange, in the process of listing application, K Company mainly had two major violations, namely, inaccurate disclosure of information related to scientific and technological innovation attribute indicators and insufficient explanation of the accuracy of cost accounting. Among them, in order to meet the listing conditions, K Company falsified the number of R&D personnel and the amount of R&D investment, and after deducting the relevant data, it no longer meets the conditions of scientific and technological innovation attribute indicators. Based on this, Shanghai Stock Exchange has issued tickets to K Company, recommendation agencies and relevant insurance agents, audit agencies and relevant signing accountants.
It is worth noting that, in addition to circulating a notice of criticism on K Company, in this case, the recommendation agency and the insurance agency are also punished by circulating a notice of criticism; It is a regulatory warning to audit institutions and signing accountants. If it can be said that the punishment of supervision warning to audit institutions and signing accountants can still be said to be past due to the insufficient accuracy of cost accounting, then it is just a notice of criticism to company K, recommendation institutions and insurance agents, and I think the punishment is light.
In fact, in order to achieve the purpose of listing and meet the conditions of the sci-tech innovation attribute indicators of the sci-tech innovation board, K Company falsified its R&D personnel and R&D investment amount, which is essentially an IPO fraud. Seriously, it is suspected of naked fraudulent issuance. The regulatory department has always claimed that the IPO project "bears the responsibility when reporting", so it is proper to severely punish the fraud of K Company's IPO.
The IPO fraud we usually focus on is mainly aimed at financial data fraud. However, the science and technology innovation board is different from the Shanghai and Shenzhen main boards, the GEM and other major boards. Due to the existence of the assessment of science and technology innovation attribute indicators, some enterprises are willing to falsify the science and technology innovation attribute indicators in order to achieve listing. For this kind of fraud, we should also say "no" to them, and severely punish the violators, rather than giving them a perfunctory punishment. Otherwise, there may be more "K companies" in the future, which will disrupt the IPO market environment.
The listing of an enterprise is not only a systematic project, but also involves many aspects. The benefits behind the listing of enterprises are huge. In fact, there are many enterprises planning to list in order to list. Among them, IPO fraud is the main way, but this is not allowed by the market.
Personally, it is far from enough to focus only on financial data for IPO fraud at present. The case of K company shows that IPO fraud will involve other aspects, which requires more inclusive indicators to measure IPO fraud. In my opinion, in addition to the falsification of financial data and the falsification of scientific and technological innovation attribute indicators of the Science and Technology Innovation Board, the false disclosure of the proposed listed enterprises in terms of the number of employees, social security payment, patent status, historical evolution, equity status, deliberate concealment of signed gambling agreements or investment agreements, and concealment of major events and non disclosure should be included in the scope of IPO fraud. However, it is necessary for the companies to be listed to be included in the IPO blacklist and to keep them out of the capital market for ever. At the same time, the recommendation institutions, insurance agencies, audit institutions and signing accountants with problems should be severely punished.
Let the indicators for measuring IPO fraud be more inclusive, which can force the companies to be listed not to have "should have disclosed but not disclosed" information when they respond to the prospectus and inquiries, improve the quality of information disclosure of the companies to be listed, and make a more transparent IPO company appear in the market.
(About the author of this article: Independent financial writers have published hundreds of articles in three major securities newspapers and other media)
