The China Securities Regulatory Commission (CSRC) Qingdao Bureau has issued an administrative penalty notice to ST Pengbo (600804) for multiple disclosure violations, marking another regulatory setback for the troubled telecom and media company.
Key Violations Identified
The Qingdao regulator uncovered two major categories of violations during its investigation:
1.Undisclosed Guarantees Totaling 1.7 Billion Yuan
Between October and November 2021, three subsidiaries of Pengbo’s controlling shareholder obtained loans worth 1.7 billion yuan (approximately $234 million) from entities controlled by businessman Li Xing. The company and its wholly-owned subsidiary Changkuan Communication Services provided undisclosed guarantees for these loans, which were ultimately used to subscribe to Pengbo’s private placement shares and repay company debts.
Investigators found Pengbo failed to:
- Disclose the guarantees in timely filings as required
- Include the information in 2021-2023 annual reports
- Report the guarantees in bond disclosure documents for “17 Pengbo Bond” and “18 Pengbo Bond”
2. Delayed Disclosure of Major Lawsuit
The company waited 18 days to disclose a January 2024 lawsuit seeking 1.52 billion yuan (principal plus interest) in guarantee payments, despite receiving legal documents on March 28. The disclosure finally came on April 15.
Regulatory Actions and Consequences
The CSRC Qingdao Bureau determined these violations contravened multiple provisions of China’s Securities Law. The regulator plans to:
- Issue correction orders and warnings to Pengbo
- Impose fines on the company and its actual controller Yang Xueping
- Penalize other responsible personnel
This follows the company’s November 2024 disclosure about receiving a CSRC investigation notice regarding the same matters.
Investor Protection Measures
Shanghai Hanlian Law Firm’s attorney Song Yixin has initiated investor compensation proceedings, citing potential grounds for claims under China’s Civil Code and Securities Law.
Eligibility for Compensation Claims
Investors who:
- Purchased Pengbo securities between April 28, 2022 and April 15, 2024
- Held or sold positions after April 16, 2024
- Suffered verifiable losses
may qualify for compensation covering investment differentials, commissions, taxes and interest losses.
Claim Documentation Requirements
Interested investors must provide:
- Copy of ID card
- Securities account confirmation (broker-stamped)
- Complete transaction records (broker-stamped)
Legal Considerations
Attorney Song emphasized important caveats:
- Final claim criteria depend on CSRC’s official penalty decision
- Direct lawsuits without regulatory findings carry higher risk
- Delisting wouldn’t terminate claims but may delay proceedings
- Bankruptcy procedures could significantly impact case timeline
The case highlights China’s tightening enforcement of securities disclosure rules, particularly regarding related-party transactions and timely reporting of material events.
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