Ruixing 2.2 billion financial fraud


No one is ready to go public in the U.S. and use the money of U.S. investors to subsidize the national light of domestic consumers — Ruixing coffee, it just collapses… Everyone was stunned.
Counterfeit transactions 2.2 billion! Ruixing coffee fell more than 80% in front of the plate
Direct fusing after opening
On the evening of April 2, Beijing time, before the opening of US stock market, Ruixing coffee posted a document on the official website of the CSRC, and then the stock price collapsed before the opening.
I know that it’s hard for you to read English. You have to change your name to Chinese…
According to the document issued by Ruixing coffee, they conducted an internal investigation and found that Liu Jian, the company’s chief operating officer and director, and several employees who reported to him had engaged in misconduct since the second quarter of 2019. This includes fabricating certain deals.
Ruixing has now dismissed Liu Jian and such employees suspected of misconduct, and has suspended contracts and transactions involving false transactions. The company will take all appropriate measures, including legal proceedings against individuals with misconduct.
According to the company, internal surveys show that the total amount of sales related to false transactions from the second quarter of 2019 to the fourth quarter of 2019 is about 2.2 billion yuan. During this period, some costs and expenses are also inflated by false transactions.
The above figures have not been independently verified by the special committee, its consultants or the company’s independent auditors, and may change with the internal investigation. The company is assessing the overall financial impact of the misconduct on its financial statements.
Because of this, Ruixing coffee said that investors should not trust the company’s previously issued financial statements. The company said that the investigation is in progress and the company will continue to evaluate its previously issued financial situation and other possible adjustments.
Such a self exposure of domestic ugliness, or such a large amount of 2.2 billion, the stock price will naturally collapse.
You know, what’s the concept of 2.2 billion pairs of lucky coffee? In the first three quarters of 2019, the net income of Ruixing coffee was 2.929 billion, an increase of 680% compared with 375 million in the same period last year.
Let’s take a look at the disk. Before the opening, the company’s share price had dropped 80%. Within minutes after the opening, Ruixing coffee’s share price had melted. In short, it directly evaporated more than 37 billion yuan.
Being short by muddy water and facing class action of many law firms
On January 31 this year, Hunshui said it received an anonymous report on Ruixing coffee. Hunshui believed that the 89 page report was true and published the short report on the official twitter.
According to the shorting report, Ruixing coffee began to fabricate financial and operational data from the third quarter of 2019, exaggerating the daily order volume of the store, the number of products included in each order, and the net price of each product, thus creating the illusion of single store profit. At the same time, Ruixing also covers up the loss of a single store by exaggerating the advertising expenses and falsely reporting the proportion of other goods except coffee.
On the same day after the publication of the research report, the shares of Ruixing coffee fell more than 26% in the session, but then recovered, closing down 10.7%. On February 3, Ruixing denied all the allegations in the shorting report, and responded that the report was groundless, the argument was flawed, and it was a malicious accusation. On the same day, Ruixing stock rebounded 7% at its highest in the session.
The next day, lucky coffee closed up 15.6%, erasing all losses since the short.
Then, a research report called “dust light research on major financial data fraud and business data fraud of Ruixing coffee” was exposed on February 5, directly referring to the financial data fraud of Ruixing coffee.
It is reported that the core investment and research members of Chenguang Research have more than 10 years of working experience in Europe and the United States. They come from the world’s top 50 and Beijing Qingfu and other well-known institutions, mainly covering consumption, science and technology and other fields.
Chen Guang research once said that because Ruixing coffee cleverly used the loopholes of jobs act in the US stock market, the disclosure of financial and business data in the quarterly report was very general, and many key detailed subjects in the financial report were not disclosed, so it covered up the flaws in Ruixing coffee data, which greatly increased the difficulty for all investors to study the financial report and find problems.
In the United States, there are very strict regulations on information disclosure of listed companies. Companies with false information disclosure may even be suspected of securities fraud. Less than half a month after the muddy water report, Ruixing coffee was also charged with making false and misleading statements.
February 13 est Ruixing coffee and its two executives filed a class action on behalf of the investors in the federal court of the Southern District of New York, the United States, on the grounds that the financial and operating information disclosed by Ruixing coffee since the third quarter of last year was materially untrue, requiring the court to order Ruixing coffee and the relevant senior management to compensate all the investors represented above for the losses caused by the untrue information. The action has been held in New York Jonan District Court filed the case.