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The financial fraud incident of Ruixing Coffee was exposed, and the capital myth broke. It is even more difficult for Chinese-funded companies to go public in the United States, which has worsened the financial markets in China and the United States that had been hit by the trade war and epidemic.

Financial fraud is a serious crime in the securities market. In the US market, regulatory agencies and the judiciary have severely cracked down on this. Once the investors and the executives involved in the event of significant losses due to fraud and fraud, the company and the executives involved may bear high illegal costs.

Here, we take a glimpse of the possible end of Ruixing and his executives by shocking the global Enron financial fraud case and the example of China ’s stock delisting due to financial fraud.

Enron ’s financial fraud and its outcome

How did Enron collapse?

Enron was an energy company based in Houston, Texas, USA. Before Enron ’s accident in 2011, Enron had about 21,000 employees and was one of the world ’s largest power, natural gas, and telecommunications companies. In 2000, it disclosed a turnover of US $ 101 billion. The selection as “the most innovative company in the United States” is a dazzling aura and was the largest energy trader in the world at that time. Its assets are as high as 62 billion US dollars, and it controls 20% of the natural gas and electricity transactions in the United States. Its business covers more than 40 countries and regions, making it a giant in the energy industry. But such a company with hundreds of billions of assets declared bankruptcy in just two months after the financial fraud scandal was exposed in 2002.

On October 16, 2001, Enron released its third quarter financial report. Enron, which has had a surplus growth for 21 consecutive months, suddenly announced that this quarter ’s loss reached US $ 618 million, which caused an uproar in the investment community. On November 22, a Wall Street website development article said that Enron had very complex trading activities with two other affiliated companies. The two companies borrowed $ 3.4 billion in debt, but did not mention the details of the two companies and the debt in the financial report. This attracted the attention of the US Securities and Exchange Commission, so Enron was required to submit detailed information with these two companies. This investigation detonated Enron’s thunder. Under the pressure of the regulatory authorities, they finally admitted to financial fraud. See if it feels hereIs it similar to the situation of Ruixing?

From 1997 to 2002, Enran falsely reported a total of US $ 586 million in profits and did not write huge debts into the financial report. During this period, Enron established a large number of affiliated companies, according to statistics, it reached 3,000 many. However, according to US law, if the shares are not up to 50%, there is no need to include this company ’s financial status in the group company ’s financial report. It was by taking advantage of this loophole that Enron took advantage of its holding position to allow these affiliated companies to borrow large amounts of money abroad and transfer profits to the group company, so beautiful data appeared in Enron ’s listed financial reports. The profit growth is considerable, and the debt is within the controllable range. Enron, investment institutions, and investors are all happy, so they continue to stage the buying and buying game.

In addition, Enran is also engaged in false transactions between its affiliates and affiliates. For example, in 2001, an affiliated company of Enron acquired another affiliated company for a huge amount of 120 million US dollars, and this acquired company’s investors in Wall Street seem to have no one to want as early as two years ago. However, this transaction was not understandable, but in the end, the financial report showed that the net profit per share reached 45 cents.

Maybe you would say that not all US company financial reports are issued by an audit company after an audit? This is about the Andersen Audit Company, one of the five largest audit companies in the world at that time. Because of Enron, a large customer, Andersen received $ 52 million in remuneration from Enron in 2000 alone, of which 27 million The dollar is a consulting service fee, and Enron did n’t want to offend the big money owner, so Enron opened her eyes and closed her eyes. What is even more shocking is that when Enron ’s scandal was exposed, Andersen also destroyed all the original documents to prevent the court from investigating, and was eventually revoked the business license for five years because of obstruction of judicial inspection, because of the serious reputation Damaged, and no client would trust him, the 87-year-old accounting firm closed.

On November 30, 2001, Enron ’s stock price plunged from US $ 90 to US $ 0.26, and its market value fell from US $ 80 billion at its peak to US $ 200 million. Is n’t there another shadow of Ruixing here?

On December 2, 2002, Enron officially applied for bankruptcy protection to the bankruptcy court. The assets in the bankruptcy list were still as high as 49.8 billion US dollars, making it the largest bankrupt company in American history at the time.

On January 15, 2002, the New York Stock Exchange officially announced the removal of Enron ’s stocks from the constituent stocks of the Dow Jones Industrial Average and stopped trading in Enron ’s stock.

After the scandal came to light, Kenneth was convicted of all six counts including fraud. The sum of the counts was sentenced to 165 years ’imprisonment, and another executive, Jeffreyski, was found to be 19 counts and he was sentenced. 185 years