Cloopen Closes The Book On Fraud Case, Looks To Rebuild

seekingalpha02-19

The SEC charged cloud services provider Cloopen with falsifying revenue, but also praised it for cooperating with its investigation into the matter.The company announced a major board overhaul in ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2412970730?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-02-19 15:10","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2412970730","market":"us","top_or_hot":-1,"title":"Cloopen Closes The Book On Fraud Case, Looks To Rebuild","media":"seekingalpha","content":"<div>\n<p>The SEC charged cloud services provider Cloopen with falsifying revenue, but also praised it for cooperating with its investigation into the matter.The company announced a major board overhaul in ...</p>\n\n<a href=\"https://seekingalpha.com/article/4671338-cloopen-closes-the-book-on-fraud-case-looks-to-rebuild\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Cloopen Closes The Book On Fraud Case, Looks To Rebuild</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCloopen Closes The Book On Fraud Case, Looks To Rebuild\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-19 15:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4671338-cloopen-closes-the-book-on-fraud-case-looks-to-rebuild><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The SEC charged cloud services provider Cloopen with falsifying revenue, but also praised it for cooperating with its investigation into the matter.The company announced a major board overhaul in ...</p>\n\n<a href=\"https://seekingalpha.com/article/4671338-cloopen-closes-the-book-on-fraud-case-looks-to-rebuild\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4534","symbol_name":"瑞士信贷持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4671338-cloopen-closes-the-book-on-fraud-case-looks-to-rebuild","article_id":"2412970730","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2412970730","pubTimestamp":1708326600,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The SEC charged cloud services provider Cloopen with falsifying revenue, but also praised it for cooperating with its investigation into the matter.The company announced a major board overhaul in Dece","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","LKNCY":"瑞幸咖啡","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0067412154.USD":"UBS (LUX) EQUITY FUND -  CHINA OPPORTUNITY \"P\" (USD) ACC","LU1105468828.SGD":"Allianz Total Return Asian Equity AM DIS H2-SGD","BK4575":"芯片概念","BK4558":"双十一","BK4587":"ChatGPT概念","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","LU1048596156.SGD":"Blackrock Asian Growth Leaders A2 SGD-H","BK4535":"淡马锡持仓","BK4220":"综合零售","BK4524":"宅经济概念","DADA":"达达集团","LU0821914370.USD":"贝莱德亚洲成长领袖A2","BK4527":"明星科技股","BK4538":"云计算","LU1688375341.USD":"贝莱德中国灵活股票基金","BABA":"阿里巴巴","BK4579":"人工智能","BK4526":"热门中概股","09988":"阿里巴巴-SW","BK4588":"碎股","BK4503":"景林资产持仓","BK4122":"互联网与直销零售","BK4502":"阿里概念","LU0651946864.USD":"贝莱德新兴市场股票收益A2","LU0918141887.USD":"安联亚洲实际收益股票基金","BK4505":"高瓴资本持仓","LU1880383366.USD":"东方汇理中国股票基金 A2 (C)","BK4581":"高盛持仓","BK4155":"大卖场与超市","BK4504":"桥水持仓","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","BK4209":"餐馆","LU1046422090.SGD":"Fidelity Pacific A-SGD","BK4563":"昨日强势股","BK4548":"巴美列捷福持仓","BK4565":"NFT概念","LU0880133367.SGD":"UBS (LUX) EQUITY FUND CHINA OPPORTUNITY USD \"P\" (SGD) ACC","LU0501845795.SGD":"瑞银大中华区股票基金P Acc SGD","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","IE00B0JY6N72.USD":"PINEBRIDGE GLOBAL EMERGING MARKETS FOCUS EQUITY \"A\" (USD) ACC","BK4554":"元宇宙及AR概念","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","BK4531":"中概回港概念","LU0072913022.USD":"UBS (LUX) EQUITY FUND -  GREATER CHINA \"P\" (USD) ACC"},"translate_title":"Cloopen结束诈骗案，寻求重建","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BABA":1,"DADA":1,"LKNCY":1,"09988":0.6},"content_text":"The SEC charged cloud services provider Cloopen with falsifying revenue, but also praised it for cooperating with its investigation into the matter.The company announced a major board overhaul in December, but faces a long road in its rebuilding effort due to stiff competition and China’s slowing economy.Cloopen’s settlement is probably too fresh to think about a potential relisting just yet, and the company has said it is still determining its next step.   da-kuk/E+ via Getty Images It was one of China’s last major IPOs in New York before the current freeze, raising $320 million in a February 2021 New York listing on big hopes for China’s cloud services market. But what started as a drizzle with so-so financial results quickly turned into a downpour onto shares of Cloopen Group Holding Ltd. (OTC:RAASY) after its May 2022 disclosure of up to 30 million yuan ($4.2 million) in fake sales on its books. Now, Cloopen is hoping to turn the page on its dubious past following a newly announced settlement of fraud charges leveled against it by the U.S. Securities and Exchange Commission (SEC). The company is hoping to follow in the footsteps of the similarly scandal-tainted Luckin (OTCPK:LKNCY), which admitted to even larger fraud in a case that shocked Wall Street in 2020 and was likely a factor behind the SEC’s crackdown on new Chinese IPOs dating from 2021. Cloopen’s case also has implications for intra-city courier services provider Dada Nexus (DADA), which just last month admitted to similarly cooking its books. All three of these cases are notable because their fraud was uncovered through internal audits, rather than through SEC-initiated probes. That’s at least partly due to the fact that the SEC previously had little or no access to these companies’ internal books because most or all of their accounting records were out of its reach in China. But that changed in 2022 when the SEC got such access through a landmark information-sharing deal with its Chinese counterpart. All these developments, when considered as a whole, should reassure foreign investors that the financial reports from U.S.-listed Chinese companies are becoming more reliable. But it’s unclear just yet if companies like Cloopen, Luckin and Dada Nexus will eventually be forgiven for their sins and allowed to return to the main exchanges on Wall Street. Both Luckin and Cloopen are currently in over-the-counter trading purgatory, having been officially booted from their previous listings on the Nasdaq and New York Stock Exchange, respectively. Dada Nexus continues to trade on the Nasdaq, but is likely to come under pressure to delist if it fails to file its annual reports while it sorts through its accounting mess. Luckin has previously stated its desire to relist if the Nasdaq will allow it, though the Nasdaq hasn’t openly commented on the case. Cloopen’s settlement is probably too fresh to think about a potential relisting just yet, and the company has said it is still determining its next step. While being charged with fraud by the SEC is obviously never a good thing, the terms of Cloopen’s settlement actually look about as good as the company could have hoped for considering the circumstances. Most notably, the SEC didn’t fine the company for its transgressions due to Cloopen’s full cooperation with the investigation. That contrasts sharply with Luckin, which was fined $180 million in 2020 for overstating its 2019 revenue by as much as 2.2 billion yuan – equal to about 40% of its expected annual sales at the time. SEC praise Truth be told, the SEC was quite praiseworthy of Cloopen for its handling of the matter. “The SEC determined not to impose civil penalties against Cloopen because the company self-reported its accounting issues, cooperated extensively with the staff’s investigation, and undertook prompt remedial measures,” it said in its statement released last Thursday. The SEC said its investigation found that “facing pressure to meet strict quarterly sales targets, two senior managers directed their employees to improperly recognize revenue on numerous contracts for which Cloopen had either not completed work or, in some instances, not even started work.” The generally positive tone to the SEC’s statement is significant, since the New York Stock Exchange will inevitably take such an attitude into consideration if and when Cloopen tries to relist its shares in the future. The stock currently trades at just $0.0002, and has mostly traded below one cent since last June, when it announced it would be delisted. Since then, the company has been busy not only trying to mend fences with the SEC, but also to steady its ship. The most significant step in that regard came in December, when it announced the resignation of five people from its board, including the relinquishing of the chairman’s position by CEO Sun Changxun. Other departing board members included CFO Li Yipeng and chief product officer Xiong Xiegang. Significantly, however, Sun, Li and Xiong all retained their positions in the company despite leaving the board. That’s quite different from Luckin, whose top two officials were both kicked out of the company after the fraud. Luckin went on to install a new top management team and has embarked on a rapid growth story that has won back investors, who have bid up its shares by more than a factor of 10 from their low point back in 2020. While the SEC may be open to a Cloopen relisting if the company can show that it has sufficiently reformed, a major obstacle to winning back investors may simply be its stalling growth. The company was hardly a rising star in its last financial report before the scandal, reporting its revenue rose 44.3% year-on-year to 276 million yuan in the third quarter of 2021. The fraud would have reduced that to perhaps around 30% growth, but either way the actual amounts are relatively small. The reality is that China’s economy is slowing sharply after years of breakneck growth, which is likely to affect companies’ spending on things like cloud services. At the same time, U.S. export restrictions could also affect the sector’s development – a factor that was behind e-commerce giant Alibaba’s (BABA) recent decision to scrap its previously announced plan to spin off its cloud division as a standalone company. On the whole, the overall picture for Cloopen remains quite cloudy. The SEC’s positive tone could pave the way for an eventual relisting, if that’s what the company wants. But first it will need to convince investors that it’s a company with a future, which could be tough in the current economic environment and also with its old management team still in place. Original Post  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2412970730"}