Guizhou Bailing Faces ST Label Due to Financial Fraud, Investors Eligible for Compensation Claims

Deep News12-22 15:32

Affected investors can register their claims on the Sina Investor Rights Protection Platform: http://wq.finance.sina.com.cn/. Follow @Sina Securities or visit the Sina Finance app or homepage for more information.

**1. Two Categories of Investors Eligible for Compensation** The Guizhou Securities Regulatory Bureau issued a preliminary administrative penalty notice to Guizhou Bailing Group Pharmaceutical Co., Ltd. (ST Bailing) on December 19, exposing years of financial misconduct. The company overstated profits by RMB 655 million from 2019 to 2021 and understated profits by RMB 459 million in 2023.

Under Shenzhen Stock Exchange listing rules, companies with falsified financial data face special treatment (ST) risk warnings. Guizhou Bailing’s headquarters has been relabeled with the "ST" tag, less than six months after its removal.

Shanghai Huzi Law Firm’s Liu Peng team has received hundreds of investor claims. The preliminary penalty notice strengthens the legal basis for further litigation.

Eligibility for claims has been updated. Investors meeting either of the following criteria may register: 1. Those who bought shares between January 31, 2024, and April 29, 2024, and sold or held them after April 30, 2024, incurring losses (precedent exists for winning cases on earnings forecast violations). 2. Those who bought shares between April 30, 2020, and November 8, 2024 (inclusive), and sold or held them after November 9, 2024, incurring losses.

**2. Penalties for Financial Fraud** Investigations revealed prolonged and substantial financial manipulation at Guizhou Bailing. The company violated accrual accounting principles in recognizing sales expenses, severely distorting financial statements and misleading investors.

Key findings: - **2019**: Understated sales expenses by RMB 350 million, inflating profits by 95.73% of reported total profits. - **2020**: Understated sales expenses by RMB 241 million, inflating profits by 115.35%. - **2021**: Understated sales expenses by RMB 63.79 million, inflating profits by 45.04%. - **2023**: Overstated sales expenses by RMB 459 million, understating profits by 93.17%.

Regulators ordered corrective actions, issued warnings, and imposed fines: - Guizhou Bailing: RMB 10 million fine. - Chairman Jiang Wei: RMB 5 million fine and 10-year market ban. - Nine other responsible individuals: Total penalties of RMB 15.6 million.

For the self-proclaimed "first Miao medicine stock," rebuilding trust may prove harder than financial restructuring.

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