The Hebei and Shenzhen bureaus of the China Securities Regulatory Commission issued advance notices of administrative penalties against Dongxu Optoelectronics (delisted), its controlling shareholder Dongxu Group and Dongxu Blue Sky New Energy, along with other related parties, for suspected securities law violations. The matters involve alleged deception to obtain issuance approvals, major financial misstatements, non-operational occupation of listed-company funds and overdue periodic disclosures. Investigators found that Dongxu Optoelectronics allegedly obtained approval for a 2017 share issuance despite not meeting the issuance conditions and raised CNY 7.565 billion, and that Dongxu Group allegedly obtained approval for a 2018 corporate bond issuance despite not meeting the conditions and raised CNY 3.5 billion. Between 2015 and 2019, Dongxu Group allegedly overstated revenue by CNY 47.825 billion, profits by CNY 13.001 billion and monetary funds by up to CNY 44.79 billion, while Dongxu Optoelectronics allegedly overstated revenue by CNY 16.76 billion and profits by CNY 5.627 billion. The cases also cite non-operational occupation of funds from Dongxu Optoelectronics and Dongxu Blue Sky by Dongxu Group and related parties, with a disclosed outstanding unrepaid amount of CNY 16.959 billion, and late publication of the companies’ 2023 annual reports. The bureaus propose a combined CNY 1.7 billion in fines for 43 responsible individuals including Li Zhaoting, and securities market bans of more than five years up to lifetime for 19 key individuals. The parties may submit statements and defences and request hearings before final administrative penalty decisions are issued following completion of the enforcement process. Suspected illegal conduct by intermediary institutions is being investigated in parallel, and potential securities crime leads will be transferred to public security authorities in accordance with procedures.
China Securities Regulatory Commission 2025-03-28
China Securities Regulatory Commission Hebei and Shenzhen bureaus issue advance penalty notices for Dongxu fundraising fraud and propose CNY 1.7 billion in fines
The Hebei and Shenzhen bureaus of the China Securities Regulatory Commission issued notices of penalties against Dongxu Optoelectronics, Dongxu Group, and Dongxu Blue Sky New Energy for suspected securities law violations, including deceptive issuance approvals and financial misstatements. Dongxu Group allegedly overstated revenue by CNY 47.825 billion and profits by CNY 13.001 billion, while Dongxu Optoelectronics allegedly overstated revenue by CNY 16.76 billion and profits by CNY 5.627 billion. Proposed penalties include CNY 1.7 billion in fines and market bans for 19 individuals, with further investigations into intermediary institutions and potential securities crimes underway.