Sichuang Zhilian faces fraud prosecution as Xingyu Shares penalizes executives

Sichuang Zhilian (formerly Sichuang Yihui) is facing criminal prosecution for suspected securities fraud and illegal disclosure of important information. The case involves the falsification of financial reports and the fraudulent issuance of 817 million yuan in convertible bonds in 2021. Authorities have targeted the company and seven executives, including the former chairman, as primary and secondary offenders.

The investigation has also implicated several intermediary institutions for failing in their oversight duties. CITIC Securities, acting as the sponsor, faces potential civil compensation risks following findings of weak internal controls. Other firms, including Tianjian Accounting Firm and Beijing Zhongyin Law Firm, have also faced regulatory penalties or warnings.

Separately, Xingyu Shares has announced internal disciplinary actions following a controversy involving the forced resignation of recent graduates. The company’s general manager has been docked 12 months of salary, the HR director has been dismissed, and other executives have received pay cuts or demotions. The company issued a public apology and pledged compensation and job placement assistance to the 107 affected graduates after reports surfaced of graduates being pressured to resign or be reassigned to manual assembly line work.