Author: song Yixin, a lawyer from Shanghai Hanlian Law firm
Many investors do not understand what is the securities misstatement claims, their own losses also think that they choose stocks improperly.
I would like to tell you about a claim case of false statement-Shenhuafa, which I hope the majority of investors can use for reference.
On January 18, 2016, Shenhuafa received the investigation notice of the China Securities Regulatory Commission. On September 19, 2016, Shen Huafa received the advance notice of Administrative punishment from the China Securities Regulatory Commission. On December 24, 2016, Shen Huafa received the decision on Administrative punishment issued by the China Securities Regulatory Commission.
In order to protect the legitimate rights and interests of investors damaged by false statements, Song Yixin, a lawyer from Shanghai Hanlian Law firm, jointly solicited litigation entrustment from investors who had purchased Shenzhen Huafa Amurb shares and suffered damage caused by false statements to represent investors in claims.
The three investors totaled more than 370000 yuan in litigation claims.
The decision on Administrative punishment issued by the China Securities Regulatory Commission found that Shenhuafa violated the Securities Law in three cases.
First, failure to disclose related transactions with subsidiaries of controlling shareholders in accordance with the regulations
On July 21, 2014 and August 8, 2014, Shenhuafa's board of directors and shareholders' meeting passed a motion approving the company to use its own idle funds of no more than 500 million yuan to purchase wealth management products, authorizing the chairman to exercise investment decision-making power and sign relevant contracts.
On September 28, 2014, Shenzhen Huafa signed a trust contract with CITIC Trust, agreeing that Shenhuafa subscribe for category T2 trust units of the trust scheme, with a total subscription amount of 500 million yuan.
On September 25, Wuhan New Oriental Education & Technology Group Real Estate Development Co., Ltd., a wholly-owned subsidiary of Wuhan Zhongheng New Technology Industry Group, had signed a RMB fund loan contract with CITIC Trust. It is agreed that CITIC Trust will grant no more than 500 million yuan in loans to Wuhan New Oriental Education & Technology Group. The total amount of the loan shall be the sum of the principal amount of the trust funds corresponding to the Class T2 trust units of the CITIC Qianjing Green Star Investment Fund Collective Trust Plan issued by CITIC Trust for the loan to New Oriental Education & Technology Group in Wuhan.
On December 26, 2014, Shenhua transferred 500 million yuan to the account of CITIC Trust Co., Ltd. (Qianjing 5) to purchase trust products. On the same day, Citic Qianjing 5 account transferred 500 million yuan to Wuhan New Oriental Education & Technology Group for loans, and Wuhan New Oriental Education & Technology Group transferred another 500 million yuan to Wuhan Zhongheng. On September 7, 2015, Wuhan New East repaid the principal of the loan to CITIC Trust, and paid a total of 44.618 million yuan in loan interest and 763900 yuan in prepayment compensation. On September 8, 2015, CITIC Trust paid 500 million yuan in trust principal to Shenzhen Huafa and paid a total of 42.8333 million yuan in trust income.
The funds from Shenzhen Huafa for the purchase of trust products from CITIC Trust were used to make loans to New Oriental Education & Technology Group in Wuhan, which constituted a related party transaction. Shenhuafa failed to comply with the related party transaction review procedures and timely information disclosure, and did not fully disclose the above-mentioned related party transactions in the 2014 annual report and 2015 semi-annual report, in violation of the provisions of the Securities Law.
Second, failure to disclose major fund transactions in accordance with the regulations
At the end of August 2015, Li Zhongqiu orally agreed with Zhu Jiusheng, legal representative and chairman of Shenzhen Vanke Financial Consulting Co., Ltd., to deposit 500 million yuan of Shenhuafa funds with Vanke Finance, which would pay a certain proportion of compensation for the occupation of funds. 500 million yuan accounted for 43.10% of Shenzhen Huafa's total audited assets of 1.16 billion yuan in 2014.
On September 8, 2015, Shenhuafa transferred 500 million yuan to Vanke Finance. On December 31, 2015, Vanke Finance transferred 500 million yuan and 19.2 million yuan respectively to Shenzhen Huafa. The payment of 500 million yuan by Shenzhen Huafa to Vanke Finance is a major event stipulated in the Securities Law, and failure to fulfill the obligation of information disclosure in time violates the provisions of the Securities Law.
Third, failure to disclose excess related party transactions in accordance with the regulations
On April 18 and May 14, 2014, Shenhuafa's board of directors and shareholders' meeting respectively examined and passed the motion that the company or Wuhan Hengfa Technology Co., Ltd. purchased LCD screens from Wuhan Hang Seng Optoelectronic Industry Co., Ltd. in 2014 for no more than US $12 million. On April 22, 2014, Shenhuafa issued an announcement.
From March to October 2014, Wuhan Hengfa Technology and Wuhan Hang Seng Optoelectronics signed a total of 10 LCD purchase and sales agreements, with a total contract purchase amount of 284.526 million yuan, exceeding the estimated total amount reviewed and disclosed.
Among them, as of June 2014, the total amount of purchase and sales agreements signed by the two sides totaled 71.4256 million yuan, nearly the expected total amount. From July to October 2014, the two sides continued to sign five purchase and sales agreements with contract amounts of 1, 195600 yuan, 90.0693 million yuan, 2.0006 million yuan, 10.835 million yuan and 10 million yuan, respectively, accounting for 36.57%, 32.87%, 0.73%, 3.95% and 3.65% of Shenhuafa's audited net assets of 274 million yuan, respectively. Accounted for 77.74% of Shenzhen Huafa's audited net assets in 2013.
According to the above purchase and sales agreement, Wuhan Hengfa Science and Technology paid a total of 279.6941 million yuan in advance to Wuhan Hang Seng Optoelectronics from March to December 2014, and the actual purchase and sales agreement was 27.8952 million yuan.
In December 2014, Wuhan Zhongheng returned 204 million yuan in advance of the outstanding contract and paid 3.92 million yuan in interest to Wuhan Hengfa Technology.
For the above-mentioned excess related party transactions, Shenhuafa failed to comply with the corresponding review procedures and failed to disclose in accordance with the regulations, in violation of the provisions of the Securities Law.
According to the facts, nature, circumstances and the degree of social harm of the above acts, the CSRC decided to order Shenhuafa to correct, give a warning and impose a fine of 400000 yuan; give a warning to the relevant responsible person and impose a fine.
According to the provisions of the Securities Law and the judicial interpretation of the Supreme people's Court, investors who have been administratively punished by the CSRC for false statements and whose rights and interests have been damaged may file a civil compensation lawsuit with a court of jurisdiction. As for the time point of the case, lawyer Song Yixin believes that the implementation date of the false statement should be April 18, 2014, and the date of disclosure of the false statement should be January 19, 2016, that is, the date on which Shenzhen Huafa announced and received the CSRC investigation notice.
Due to the exposure of Shenhuafa's misrepresentation, Shenhua's share price fell, resulting in the loss of investors' rights and interests. In this regard, the defendant Shen Huafa should bear the civil liability for the infringement of false statements for the investors whose rights and interests are damaged.
Although the case has not yet been decided, it can be seen from the case that this is also what investors need to know: if a listed company makes false records or misleading statements or major omissions on the facts or acts of securities issuance, trading and related activities, causing investors to suffer losses as a result of making wrong investment decisions without knowing the truth, and there are administrative penalties imposed by the CSRC. Investors can claim compensation from listed companies (including responsible persons such as Dong Jiangao of listed companies, securities companies, accounting firms and other intermediary agencies).