Fraud,
again.
China's stock market
has been hit by another scandal
involving a company that inflated its
books to be listed.
While
the company, Wanfu Biotechnology (Hunan)
Agricultural Development Co Ltd, and
relevant intermediary agencies must receive
their due punishments, regulators must
reflect on how such a fraudulent
company managed to get through the
IPO procedure.
The China
Securities Regulatory Commission said on
April 3 that investigations showed the
company started falsifying its books
as early as 2008 in preparation for
its listing, which was completed in
2011.
The company's shares
first traded in September 2011 at a
price of 25 yuan ($4) per share. The
price slumped to 5.04 yuan a share
at the close of trading on
Monday, which means big losses for
the 7,000 or so investors in the
company, most of whom are
individuals.
The company, however,
raised 425 million yuan through its
IPO, making its directors multimillionaires
in the past years.
From 2008
to 2011, the company inflated its
revenues by a total of 740 million
yuan and net profits by 160 million
yuan. In 2011, its real net profits
were only 1.1 million yuan while it
claimed they were 60.3 million
yuan.
The case has made
the headlines as one of the
most serious frauds in China's
stock market history.
The CSRC
has vowed to mete out punishment
in accordance with the law, and
analysts said the company could be
forced to delist from the market
and some of the directors may
face criminal charges.
But even
if this turns out to be the
case, this will not quell the
anger of the investors that were
cheated, because the company and its
management are not the sole
wrongdoers.
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（Editor：WangXin、Chen
Lidan）
