GuShiio.com ① The China Securities Regulatory Commission reported that it was initially found that the financial information disclosed by Dongfang Group from 2020 to 2023 was seriously false, suspected of major financial fraud, and may involve major illegal forced delisting;
② As of the end of the third quarter of 2024, Dongfang Group still has 129,000 shareholders. How to protect their legitimate rights and interests has become a matter of concern.
Cailian News, March 1 (Reporter Liu Jian and Wang Ping ‘an)After eight months, Dongfang Group (600811.SH), which was mired in a whirlpool, finally made new progress. The China Securities Regulatory Commission initially found that Dongfang Group was suspected of major financial fraud, and this behavior may involve major illegal forced delisting.
As of September 30, 2024, the number of shareholders in Dongfang Group reached 129,000. After major financial fraud gradually surfaced, how to protect their legitimate rights and interests has become a matter of concern. Dong Fei, a lawyer at Beijing Guoshun Law Firm, told the Financial Union reporter,”Even if a listed company ends up delisted due to major violations of the law, as long as it is still operating normally, it can seek compensation through legal channels to help shareholders fight for their legitimate rights and interests.”
Dongfang Group’s major financial fraud “surfaced”
Yesterday evening, the China Securities Regulatory Commission informed: On June 20, 2024, I will open an investigation against Dongfang Group Co., Ltd.(referred to as Dongfang Group). It has been initially ascertained that the financial information disclosed by Dongfang Group from 2020 to 2023 is seriously false and is suspected of major financial fraud, which may involve major illegal forced delisting. The case is currently under investigation, and I will find out the illegal facts as soon as possible and deal with them seriously in accordance with the law.
According to the previous financial reports disclosed by Orient Group, during the period from 2020 to 2023, the company’s revenue exceeded 10 billion yuan in three years. In addition to achieving a profit in net profit in 2020, it has suffered losses in net profit for three consecutive years since then.
In 2020, the company’s operating income was 14.711 billion yuan, a year-on-year increase of 11.63%, and the net profit was 240 million yuan, a year-on-year decrease of 58.8%; in 2021, the company’s operating income was 13.729 billion yuan, a year-on-year decrease of 6.68%, and the net profit loss was 1.719 billion yuan, a year-on-year decrease of 814.81%; In 2022, the company’s operating income will be 11.265 billion yuan, a year-on-year decrease of 17.94%, and a net profit loss of 996 million yuan; in 2023, the company’s operating income will be 6.081 billion yuan, a year-on-year decrease of 46.02%, and a net profit loss of 1.557 billion yuan.
On June 18, 2024, Dongfang Group’s “East Window Incident” occurred. The company suddenly announced that due to the tight liquidity of its related party Dongfang Group Finance Co., Ltd., the company and its subsidiaries ‘1.64 billion yuan deposit withdrawal from the finance company was restricted.
This news quickly caused market shocks and kicked off the crisis of Orient Group.
After the financial crisis broke out, in order to appease the market and investors, the company’s actual controller quickly issued the “Letter of Commitment on Resolving Risks Related to Financial Companies”. As the controlling shareholder of Orient Group Finance Co., Ltd., its relationship with the actual controller Zhang Hongwei will adopt methods including but not limited to asset disposal to support financial companies in resolving the problem of insufficient liquidity funds and ensure the safety and liquidity of listed companies ‘deposits in financial companies. Orient Group Co., Ltd. and the actual controller expect that the above commitments will be completed within the next 3-6 months.
But six months have passed, and the promise of Zhang Hongwei, the actual controller of the listed company, has become a “bubble”. Behind the financial fraud, Dongfang Group’s financial pressure has become increasingly prominent. On February 14, 2025, Dongfang Group disclosed an announcement that it could not return the raised funds on schedule. On March 6, 2024, the company used 629 million yuan of idle raised funds to temporarily replenish working capital. Due to the company’s tight working capital, the company is not expected to be able to return the above raised funds to the special raised funds account on schedule.
Lawyer: 129,000 shareholders can normally defend their rights
Cailian reporters found on platforms such as Stock Bar that many investors expressed their views: “What should investors do? Are there any delisting compensation?” “Individual investors pay a heavy price”… The lines are full of anxiety and worry.
According to the Securities Law and relevant laws and regulations, listed companies have the obligation to disclose financial information truthfully, accurately and completely to protect investors ‘right to know. If the rights and interests of shareholders are damaged due to the company’s financial fraud, shareholders have the right to protect their rights and interests through legal channels. In such cases, shareholders can file a civil lawsuit with the court in accordance with the “Several Provisions of the Supreme People’s Court on the Trial of Civil Compensation Cases Arising from Misrepresentations in the Securities Market”, demanding that the company and relevant responsible persons compensate for the investment losses caused by financial fraud.
Dong Fei, a lawyer at Beijing Guoshun Law Firm, told the Financial Union reporter,”Even if a listed company ends up delisted due to major violations of the law, as long as it is still operating normally, it can seek compensation through legal channels to help shareholders fight for their legitimate rights and interests.”
Regarding the scope of the claim, Dong Fei further pointed out that “the claim time range has two periods: start and end. Since Dongfang Group was suspected of financial fraud in 2020, false statements have been involved since the day when Dongfang Group’s 2020 annual report was released. Investors who bought later can make claims, but it should be noted that if they were suspected of financial fraud in the 2020 semi-annual report, this time may be advanced to the release date of the 2020 semi-annual report; As for the deadline, the court may need to finally determine it. One time point may be the time when the CSRC filed a case, and the other is the time when the financial company’s large deposit withdrawals were restricted. But the final specific time point still needs to see the final penalty result of the CSRC.”
According to statistics, in 2024, the China Securities Regulatory Commission investigated and dealt with 135 illegal cases of information disclosure, including financial fraud, a year-on-year increase of 17%, ranking first in the number of cases of all types. The China Securities Regulatory Commission has repeatedly reiterated that it will continuously strengthen its efforts to crack down on fraudulent issuance, financial fraud, etc. The illegal activities that investors are most concerned about, most hated, and “most intolerable”.
It is worth mentioning that Orient Group issued an announcement on the progress of the investigation and risk warning last night, stating that as of the disclosure date of this announcement, the investigation by the China Securities Regulatory Commission is still in progress and the company has not received any conclusions on the above-mentioned investigation matters. Concluding opinions or decisions. During the investigation period, the company will actively cooperate with the relevant investigation work of the China Securities Regulatory Commission.
