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ST Cisco Systems (688053) recently announced that the company held the third meeting of its third board of directors on that day, during which it approved the "Proposal on Applying for Removal of Other Risk Warning on the Company's Stock" and submitted an application to the Shanghai Stock Exchange for the removal of the other risk warning (ST) designation.
The ST designation stemmed from financial fraud. On October 24, 2025, Cisco Systems disclosed an announcement stating that it had received an "Administrative Penalty Decision" issued by regulators. According to an investigation by the China Securities Regulatory Commission, Cisco Systems' 2022 annual report contained false records, inflating operating revenue by 9.9604 million yuan and total profit by 7.0054 million yuan, accounting for 4.16% and 6.56% of the company's operating revenue and total profit respectively for the same period.
Based on the formal penalty, those who purchased shares between April 10, 2023 and January 17, 2025 (inclusive) and sold or still held shares after January 18, 2025 at a loss are eligible to register for compensation claims. Before participating in the compensation claim, investors should prepare relevant transaction documents, such as trading records and account statements, so that the legal team can review whether they meet the compensation conditions. (ST Cisco Systems compensation claim entry)
For a long time, financial fraud has been a persistent problem in the capital market, severely damaging investor interests and undermining market fairness and transparency. According to regulatory investigations, the first issue was fabricated sales transactions: in December 2022, Cisco Systems fabricated a testing business transaction worth 3.3665 million yuan with Sichuan Saidi Information Technology Co., Ltd. Without receiving the goods to be tested or actually conducting testing services, the company arranged for personnel to generate reconciliation statements and used personal connections to affix the other party's official seal.
The second issue was premature revenue recognition: in September 2022, Cisco Systems recognized revenue before delivering tested goods to customer Jiayuan Technology and before Jiayuan Technology confirmed the reconciliation statement, inflating revenue and total profit by 2.4693 million yuan and 2.037 million yuan respectively. The third issue was improper revenue recognition: two settlement contracts signed between Cisco Systems and Jiayuan Technology in September 2022 were subject to major disputes involving 4.1246 million yuan. The company recognized revenue despite knowing that disputes existed, resulting in inflated sales revenue and total profit.
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