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China Daily / 2020-06 / 30 / Page008

Reasonable to punish firm for scallops that fled

21ST CENTURY BUSINESS HERALD | Updated: 2020-06-30 00:00

The China Securities Regulatory Commission recently penalized Zhangzidao, imposing a 600,000 yuan ($84,815) fine on the company, a 30,000-300,000 yuan-fine on 15 responsible personnel and five-year to lifetime ban on four of its personnel from entering markets.

The Zhangzidao Group has become a laughing stock on the Chinese stock market for coming up with innovative excuses such as "the scallops fled" or "the scallops died" to explain "financial losses". Such absurd claims hurt investor confidence while the regulator had no way to prove the company committed irregularities.

The CSRC launched a probe into the company's affairs in February 2018 and punished the company, directors concerned and supervisors in July 2019 for alleged financial fraud and irregularities in its disclosure about scallops.

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