Another incident! Shenzhen listed company sued for selling shares

The cross-border circle has been very lively recently. On the one hand, many sellers are watching the operating status of top sellers such as Kuaishou, JOYBUY, and AjMall with the mentality of spectators , and on the other hand, they are trying to draw experience from the operating history of these top sellers.

Industry insiders know that there have been many negative news about KJT and its subsidiaries in the past six months, including: *ST delisting warning, suppliers coming to demand payment, bankruptcy liquidation, and facing a large number of lawsuits.

Recently, Cross-Border Link has released several new announcements in succession, disclosing that Global Easy Shopping has entered bankruptcy liquidation procedures.

Cross-border Communication responded to the Shenzhen Stock Exchange, and Global Easy Shopping entered bankruptcy liquidation procedures

Earlier, Cross-border Communication issued an announcement stating that its wholly-owned subsidiary Global Easybuy had been ruled by the court to be accepted for bankruptcy liquidation. This matter attracted great attention from the Shenzhen Stock Exchange, which issued a "Letter of Concern Regarding Cross-border Tongbao E-commerce Co., Ltd." and asked Cross-border Communication five questions, requiring it to provide detailed explanations on the bankruptcy of its subsidiary Global Easybuy.

Subsequently, Cross-border Link issued an announcement on December 11, responding to the Shenzhen Stock Exchange's inquiries as follows:

1. After Shenzhen Global transfers all seals, certificates, bank account information and financial books to the administrator in accordance with the law, Cross-border Link will lose its control over it, and Shenzhen Global will no longer be included in the company's consolidated financial statements . This behavior complies with Article 7 of "Enterprise Accounting Standard No. 33 - Consolidated Financial Statements" and is compliant.

2. Cross-Border Communication is sorting out and resolving the matters related to its inability to express an opinion in its 2020 annual report item by item . Shenzhen Global’s entry into bankruptcy liquidation procedures will not have a substantial impact on the elimination of the matters on which Cross-Border Communication is unable to express an opinion in its 2020 annual report.

3. In response to the audit restrictions of Shenzhen Global due to staff turnover, insufficient confirmation letters and inability to provide original vouchers and original materials required for audit matters, the Cross-Border Communication Special Working Group has actively dispatched professionals to sort out its financial problems and carry out asset and debt verification work.

4. In accordance with the relevant provisions of the "Shenzhen Stock Exchange Listing Rules ( Revised in 2020)", Cross-Border Link disclosed the "Announcement on the Implementation of Delisting Risk Warning, Other Risk Warning and Suspension of Trading for the Company's Stock Trading" on April 30, 2021. Cross-Border Link's stocks have been subject to special treatment of "delisting risk warning" and "other risk warning" since May 7, 2021.

5. The persons who are aware of the inside information of the bankruptcy liquidation application against Shenzhen Global are: Li Yong, Mei Yuegang, Wang Xiaohua, Zhang Hongxia and Wang Yuedi.

Except for Mei Yuegang, an insider who bought and sold the company's stocks during this period, the company's directors, supervisors, senior management and other insiders did not buy and sell the company's stocks. According to the statement issued by Mei Yuegang, his aforementioned transactions were independent judgments based on the recent market environment and were personal independent behaviors. He did not use insider information to make profits.

Investors sue Cross-border

In Cross-Border Tongbao's announcement regarding the court's ruling for bankruptcy liquidation of its wholly-owned subsidiary, Cross-Border Tongbao also issued an investment risk reminder to investors.

Cross-border Communication said that after Shenzhen Global enters bankruptcy proceedings, if the court appoints an administrator to take over Shenzhen Global, the company will lose control over it, and Shenzhen Global will no longer be included in the company's consolidated financial statements. The company will continue to pay attention to the subsequent progress of this matter and fulfill its information disclosure obligations in a timely manner in accordance with relevant regulations. Investors are kindly requested to pay attention to investment risks.

It is reported that Cross-Border Link has been involved in lawsuits more than once due to investment issues. On May 20, 2021, Cross-Border Link announced the "Announcement on the Implementation of the Proposal Letter from the Company's Shareholders to Internal Employees to Increase the Company's Stock Holdings", stating that in 2018, the company's shareholders Yang Jianxin and Xu Jiadong proposed that internal employees increase their holdings of the company's stocks, and promised to compensate if the purchase of stocks during the initiative period resulted in losses or the income did not meet the standards. At present, a total of 23 employees have received compensation of 8.35 million.

Recently, Cross-Border Communication was sued again. The difference from the result in May was that the shareholders lost the case this time.

According to the editor, Shenzhen Cross-border Tongbao announced the relevant situation after the case filed by the plaintiff Wang Xijing against the company for securities false statement liability dispute was accepted.

In the lawsuit, the plaintiff Wang Xijing hopes to order Cross-Border Tongbao to compensate him for his investment difference, commission, stamp duty and interest losses totaling 823,124.46 yuan; and order the defendant Xu Jiadong to bear joint and several liability for the above-mentioned litigation requests.

Regarding this lawsuit, the Taiyuan Intermediate People's Court reviewed and held that this case was a civil compensation lawsuit filed by Wang Xijing on the grounds that his rights and interests were damaged due to false statements made in the Cross-Border Securities Market. It complied with the relevant provisions of the Civil Procedure Law and the People's Court should accept it.

However, the Taiyuan Intermediate Court also mentioned that the plaintiff should submit the administrative penalty decision of the relevant authority or the criminal judgment document of the People's Court to prove the existence of the fact of false statement of securities, which is the prerequisite for the People's Court to accept such cases. At present, the judicial interpretation has not been abolished or revised and is still valid.

However, although there is a warning letter issued by the Shanxi Regulatory Bureau of the China Securities Regulatory Commission to Cross-border Communication in this case, the warning letter is not the administrative penalty decision involved in the above provisions. Therefore, this case does not meet the conditions for acceptance of a civil case, and the plaintiff's lawsuit should be dismissed.

In this regard, some netizens commented that it is despicable that cross-border communication approval letters violate regulations and exploit legal loopholes.

However, some netizens commented that they blamed the company for their losses and asked if the plaintiff was embarrassed that the case was rejected. The rejection was useless, so they should not sue in the future.

In addition to Wang Xijing, another person also filed a lawsuit against Cross-Border Link.

Cross-border Communication recently released an announcement involving a lawsuit. The case filed by plaintiff Huang Jiayun against Cross-border Communication Securities for false statement liability dispute has been accepted by the Taiyuan Intermediate People's Court of Shanxi Province, and the litigation amount is RMB 598,322.

The plaintiff believes that in order to cooperate with their own reduction of holdings and cash out, Yang Jianxin and Xu Jiadong of Cross-border Communication falsified the pre-disclosure of annual report information for three consecutive years . The huge profit difference between the pre-disclosed profits and the actual profits is enough to show that the defendant's information disclosure fraud is significant and constitutes a false statement. The defendant's false information disclosure led the plaintiff to make a wrong investment decision and caused the plaintiff significant investment losses. The defendant should bear the corresponding legal responsibility.

In the lawsuit, the plaintiff Huang Jiayun hopes that the Taiyuan Intermediate People's Court will order the defendant to compensate for various economic losses totaling RMB 598,322 (including: investment difference loss, commission loss, and interest loss); and order the defendant to bear all litigation costs in accordance with the law.

In the announcement, Cross-Border Link stated that the company will conduct corresponding accounting treatment in accordance with the requirements of relevant accounting standards and actual conditions, and will continue to pay attention to the trial of relevant cases and fulfill its information disclosure obligations in accordance with the law.

Under this announcement, some netizens believe that Yang Jianxin and Xu Jiadong used the national securities market to commit fraud, causing damage to the country's reputation, and should be held accountable for their legal responsibilities.

At present, the case is still being accepted by the Shanxi Intermediate People's Court, and the outcome of the lawsuit is yet to be known.

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