The Aftereffect Of Kangde'S 10 Billion Fraud: Zhong Yu Argues That The Fraud Was Kidnapped By The Stock Price

Recently, the China Securities Regulatory Commission (CSRC) once again issued a punishment on the illegal disclosure of interbank bond market information of kangdexin Composite Materials Group Co., Ltd. (the former listed company "kangdexin") and ordered kangdexin Composite Material Group Co., Ltd. to correct and give a warning; Zhong Yu, the actual controller of the company, was warned.

However, according to Zhong Yu's statement and defense, he said that the investment in high-performance carbon fiber industrialization project led to Kangde group being kidnapped by the stock price and the capital market, and the false increase in performance was a last resort.

China Securities Regulatory Commission (CSRC) refused to accept this defense and said that honesty, trustworthiness and legal operation are the bottom line of any company's development, and any behavior that wants to support the stock price through false performance will eventually pay a painful price.

Questioning the lack of jurisdiction of CSRC

In January 2019, kangdexin was unable to repay the short-term financing bonds of RMB 1.5 billion, and various circles questioned the authenticity of the financial information disclosed in the company's third quarter report in 2018. The CSRC immediately started on-the-spot inspection and carried out investigation on file in a timely manner.

After investigation, the CSRC found that there were false records in the financial reports from 2015 to 2018 disclosed by kangdexin.

In the past four years, kangdexin has inflated its operating revenue, operating costs, R & D expenses and sales expenses by means of fictitious sales business, fictitious purchasing, production, R & D expenses and product transportation expenses, resulting in the total virtual profit increase of 2.242 billion yuan, 2.943 billion yuan, 3.908 billion yuan and 2.435 billion yuan in 2015-2018 financial reports, accumulating nearly 12 billion yuan, Among them, the total false increase of profits in 2018 even accounted for 711.29% of the total profits of the current period.

Moreover, the bank deposit balance disclosed in kangdexin's 2015-2018 annual report also has false records. Within four years, kangdexin disclosed that the account group balance of Bank of Beijing was RMB 4.600 billion, RMB 6.160 billion, RMB 10.288 billion and RMB 12.209 billion, totaling over RMB 33 billion. However, according to the investigation of the CSRC, the actual balance of the Bank of Beijing account group of kangdexin at the end of each year is 0.

However, for the above illegal facts, Kangde Xinfang did not accept it and put forward four defense opinions.

It pointed out that there was no legal basis for the SFC to exercise jurisdiction over the case, and there were problems such as violating the principle of "no more punishment for one case" and insufficient evidence.

Zhong Yu also said that in order to invest in high-performance carbon fiber industrialization projects, Kangde group financed by pledging kangdexin shares, which led to the kidnapping of Kangde group by the share price and the capital market. The company had to meet the capital market expectations through the serious illegal way of increasing performance falsely, and requested that the company should not be subject to administrative punishment, and it should be considered when punishing itself.

All of the above opinions were rejected by the CSRC. The CSRC stressed that only by making the company bigger and stronger through scientific and technological innovation and green development, can it really win the favor and recognition of investors. Such acts of cheating investors and seriously disrupting the market order will be severely punished.

In another administrative penalty decision issued on the same day, the CSRC ordered Kangde Investment Group Co., Ltd. to correct, give a warning and impose a fine of 600000 yuan; Zhong Yu was given a warning and fined 300000 yuan.

Big white horse with a market value of 100 billion

"Holding 15 billion cash, but not paying back 1 billion bonds", the story of the fall of kangdexin, a big white horse with a market value of 100 billion, started with the default of bonds in early 2019.

In January of that year, the SSE announced that the first phase of ultra short-term financing bonds (Code: 011800757, referred to as: 18 kangdexin scp001) of kangdexin Composite Materials Group Co., Ltd. in 2018 was not cashed on time, and the issuance scale of the bonds was 1 billion yuan. As a result, Kang De Xin, which has been questioned by the market, has opened the hole of financial fraud.

Meanwhile, on January 22, 2019, kangdexin was put on file for investigation by the CSRC for suspected illegal information disclosure.

Since then, kangdexin has staged a series of farces, including being questioned by the independent directors, internal fights among shareholders, frequent replacement of the chairman, struggle between minority shareholders and management, etc.

On May 12, 2019, Zhong Yu, chairman of Kangde group, major shareholder and actual controller of Kangde New Composite Materials Group Co., Ltd., was taken criminal coercive measures by the police for suspected crimes. The financial fraud of kangdexin falls down the real hammer.

On April 6 this year, the Shenzhen Stock Exchange announced that it had imposed a major illegal mandatory delisting on Kangde new shares. Since then, kangdexin, which has been listed for ten years and once brilliant, has finally stopped here due to financial fraud.

On April 14, kangdexin entered the delisting consolidation period, opening the final curtain call of the capital market.

On May 31, kangdexin terminated its listing and delisted. By the end of the delisting period, it had dropped 94.32% and closed at 0.2 yuan per share, less than 1% of its peak share price.