Jia Yueting, who was born in the Year of the Ox, received a huge fine from the China Securities Regulatory Commission in the Year of the Ox.
On the evening of April 12, LeTV 3 (400084.OC) announced that the company and Jia Yueting, the actual controller of LeTV at the time, were fined approximately 240 million yuan. It has been nearly four years since 48-year-old Jia Yueting took on debt and went to the United States to build cars.
The 240 million fine is a summary of Jia Yueting’s past LeTV era. With only a fine of 240 million, can Jia Yueting completely turn the page on LeTV? Will the auto industry, which has been heavily subsidized, allow him to start over?
Can the old one be removed?
LeTV and Jia Yueting were each fined 240 million yuan by the China Securities Regulatory Commission for the following two reasons.
First, due to LeTV’s financial fraud from 2007 to 2016, the documents related to its initial public offering and listing (hereinafter referred to as IPO) application and annual reports from 2010 to 2016 contained false records. As the actual controller of LeTV, Jia Yueting was fined a total of 900,000 yuan.
In addition, for LeTV’s fraudulent issuance of non-public shares in 2016, according to Article 189 of the Securities Law, LeTV was fined 5% of the funds raised, or 240 million yuan. As the actual controller of LeTV, Jia Yueting instigated others to engage in the above-mentioned illegal acts and was fined a total of 240.3 million yuan.
Public information shows that in November 2017, Jia Yueting was interviewed by the media and stated that LeTV’s IPO100 was not fake. Now, the boots of a fine of 240 million yuan have finally landed. In September 2020, Jia Yueting was also banned from entering the securities market for life. Is this the end of Jia Yueting’s LeTV era?
It is worth mentioning that the above-mentioned fines are only two of the five charges against LeTV and Jia Yueting by the China Securities Regulatory Commission.
The other three charges involved information disclosure violations, and the China Securities Regulatory Commission did not make any penalty recommendations. These include LeTV's failure to disclose related-party transactions, LeTV's failure to disclose that it provided guarantees for LeTV Holdings and other companies, and LeTV's failure to truthfully disclose that Jia Yueting's brothers and sisters fulfilled their commitments to borrow money from listed companies.
Lawyer Sheng Chong believes that in terms of criminal matters, Jia Yueting may be involved in illegal disclosure and failure to disclose important information. Article 161 of my country's Criminal Law stipulates that for the crime of illegal disclosure or non-disclosure of important information, the directly responsible person in charge and other directly responsible personnel shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall be sentenced to two years concurrently or separately. A fine of not less than 10,000 yuan but not more than 200,000 yuan is imposed.
Can a new one begin?
Regarding the fine issued by the China Securities Regulatory Commission, Jia Yueting’s attitude is silent.
Should I pay this 240 million fine?
Although FF tries its best to downplay the Jia Yueting label on itself, Jia Yueting's personal influence still exists. Especially in the Chinese market. In January this year, Geely Holding not only officially announced a small investment in FF, the two parties also announced the signing of a framework cooperation agreement and explored the possibility of Geely and Foxconn establishing a joint venture to provide foundry services for FF.
If you choose to admit the fine, how should you pay the 240 million yuan fine? FF, which is expected to land on the US stock market in the second quarter, may be able to solve his funding problem.
In November 2016, a financial crisis broke out in LeTV’s system. In July 2017, Jia Yueting went to the United States to build cars but did not return. After experiencing setbacks such as a shortage of funds and delayed mass production of its main model FF91, FF finally chose to adopt a reverse acquisition of a listed company to achieve listing.
On March 31, FF announced that the merger transaction between FF and Nasdaq-listed company PSAC is expected to be completed in the second quarter of 2021. Upon completion of the transaction, FF will trade on Nasdaq under the ticker symbol "FFIE."
If FF successfully lands on the U.S. stock market, the mass production of FF91 is expected to become an important factor in boosting stock prices.
FF previously announced that it plans to launch FF 91 within about 12 months after the merger is completed. Thirteen days later, on April 13, FF’s WeChat official account was finally updated, and the content was that FF91 will be equipped with Nvidia chips . The general background is that the production capacity of many car companies has been affected by the shortage of chips.
However, compared with his opponents, Jia Yueting started building cars late. Xpeng, which entered Weilai and Ideal fields later than him, not only achieved mass production, but also listed on the U.S. stock market. Internet companies such as Baidu and Didi that were not originally competitive have also invested in the field of car manufacturing. Mass production of the FF91 will have to wait at least another year.