Leading Gaming Stock "37 Interactive Entertainment" Severely Penalized for Financial Fraud, Multi-Million Fine Exposes Profit Manipulation Scandal

Deep News12-09

China's securities regulator has imposed a fine exceeding 30 million yuan on gaming giant 37 Interactive Entertainment Network Technology Group Co.,Ltd., with the penalty decision exposing seven years of false records and concealed related-party transactions.

1. Regulatory Authorities Issue Formal Penalty On December 5, 2025, 37 Interactive Entertainment disclosed receiving the administrative penalty decision from regulators. Investigations revealed multiple information disclosure violations between 2014 and 2021.

Alongside the CSRC fine, Anhui securities regulators issued warning letters to 13 former executives on the same day, while the Shenzhen Stock Exchange publicly censured the company and several responsible individuals.

The regulatory investigation spanned two years. On June 27, 2023, the CSRC initiated probes against the company, its actual controller/chairman Li Weiwei, and vice chairman Zeng Kaitian for suspected information disclosure violations.

2. Four Categories of Violations Identified The investigation uncovered four types of violations: - False records of shareholder holdings in annual reports from 2014-2020 - Failure to disclose the 1.4 billion yuan acquisition of Jiangsu Jiguang as a related-party transaction in 2018 - False records in temporary announcements and material omissions in 2020 annual report regarding the 2.88 billion yuan indirect acquisition of Guangzhou 37 - Undisclosed related-party transactions totaling 1.15 billion yuan, 1.08 billion yuan, 760 million yuan and 193 million yuan with Hainan Liyuan and other companies from 2018-2021

3. Investor Compensation Guidelines The CSRC ordered corrective actions, issued warnings, and imposed fines totaling 32.55 million yuan - including 9 million yuan on the company and individual fines ranging from 250,000 yuan to 14 million yuan on six responsible persons.

Investors who purchased shares between March 31, 2015 and June 27, 2023, and sold after June 28, 2023 or still hold shares with losses may be eligible for compensation claims. Legal experts advise preparing relevant transaction documents for claim assessment.

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