Fraud shock! For three straight years, financial fraud has been going on—could another listed pharmaceutical company be heading for collapse? Tens of thousands of retail investors are getting scammed and reaped.

Source: Brand Observer

Another listed company in A-shares has爆雷!

A notice has completely torn off the “shame cloth” of three consecutive years of financial fraud.

As a listed pharmaceutical company with a 25-year history, it inflated revenue by over 700 million yuan and profit by over 160 million yuan in three years, relying on a series of “bizarre” operations, deliberately twisting the financial reports.

Image source: Shandong Securities Regulatory Bureau

But those who often walk by the river know they won’t stay dry. Now, not only are seven subsidiaries declared bankrupt, but the company also faces a “delisting countdown.”

Perhaps even the company didn’t expect that their “cover-up” from the past would be uncovered so quickly by authorities. Now, the company has been fined 10 million yuan, 14 senior executives have been fined a total of 31 million yuan, and tens of thousands of shareholders have been “cut leeks.”

Image source: China Securities Regulatory Commission

Behind this carefully prepared “Ponzi scheme,” who is manipulating the financial reports of A-shares market? What other tricks and traps are there? Can the hard-earned money of tens of thousands of investors be recovered?

Three years of professional fraud! Seven subsidiaries successively go bankrupt

Another listed pharmaceutical company is about to cool off?

These days, scams are everywhere, and tricks are endless.

Seeing a company build a tall building to entertain guests, only to see it collapse and guests disperse. As a veteran listed pharmaceutical company, Changjiang Pharmaceutical has once again staged the story of “white swan” turning into “toad”!

Now, the company has entered the delisting restructuring period, and after three years of professional fraud, it has finally reached the “big finale.”

Image source: Company announcement

From being a representative of A-share pharmaceutical companies to now being targeted for delisting and removal of caps by the capital market, another listed pharmaceutical company is about to cool off?

Perhaps no one expected that this veteran pharmaceutical company, established for 25 years, would repeatedly play “misdirection,” attempting to cover up its long-standing losses with inflated revenue and profit figures.

But falsehoods cannot last forever; truth cannot be faked. Looking at this three-year-long financial fraud “report card,” between 2021 and 2023, the company fabricated fake outbound and inbound shipment documents, inflating revenue by over 732 million yuan and total profit by over 163 million yuan.

Image source: Company announcement

Even more frightening, in 2022, the inflated profit accounted for 88.23% of the total profit that year, meaning nearly 90% of that year’s profit was fake data.

Three consecutive years of inflating revenue and profit—such a huge financial loophole—are the audits during this period all “turning a blind eye”?

Or did the auditors at the time overlook it, just wanting to make the data look “pretty,” and continue to use “misdirection” to deceive shareholders and regulators?

However, there’s no airtight wall in the world; financial fraud schemes are bound to be exposed sooner or later.

Later, when the truth came out, the CSRC and Shenzhen Stock Exchange launched investigations and found multiple instances of financial fraud at Changjiang Pharmaceutical. The company’s three-year fraud scheme was made public.

Image source: Company announcement

Subsequently, an official notice was issued, imposing a fine of 10 million yuan on the company, and fines totaling 52k yuan on 14 involved senior executives. Although these fines seem huge, they are a mere “drop in the bucket” compared to the over 2.46B yuan of inflated revenue and profit.

Image source: Company announcement

Besides fines, key executives like General Manager Luo Ming were banned for life from securities markets, and Yang Zhenghui, responsible for sales and procurement, was banned for 10 years—truly a satisfying outcome.

Image source: China Securities Regulatory Commission

In the past, senior executives enjoyed privileges, but now they face fines of over a million yuan and possible legal accountability—likely to be drinking northwest wind.

The thrill of fraud comes with a high price! Meanwhile, the seven subsidiaries of Changjiang Pharmaceutical also “suffered,” successively declaring bankruptcy, with employees laid off. This listed pharmaceutical company is also at risk of delisting at any time.

Image source: Company announcement

Compared to the bankruptcy of seven subsidiaries, the forced delisting of the parent company, and fines for executives, the biggest victims are the shareholders and retail investors.

The consequences of this fraud scheme are more visually evident in the stock price plummeting—dropping from the peak of 28.95 yuan at the end of June 2015 to just 0.44 yuan now, a decline of over 98%!

Image source: Stock Market Express

In other words, if investors bought the stock at a high point, they probably lost everything—including their pants.

Image of netizens’ comments

The company not only was labeled “ST” but now has directly become “Chang Pharmaceutical Delisted,” and is not far from actual delisting. Turning things around is almost impossible.

Image source: Company announcement

Moreover, the delisting notice has been issued, and trading will resume from the 20th of this month. After 15 consecutive trading days, the company will officially enter the delisting process—meaning this is the last chance for shareholders in the A-share market.

Clearly, delisting is inevitable. This veteran listed pharmaceutical company in A-shares is also heavily in debt.

Image source: Company announcement

The capital market is never short of stories, but deception and falsehoods always fail in the end. The delisting of ST Changjiang after three years of financial fraud is ultimately “playing with fire.”

Heavy penalty of 41 million yuan is not the goal

The behind-the-scenes masterminds also prefer to stay in the shadows

Although the company and executives were fined a total of 41 million yuan, is it only the company and executives behind the three-year-long financial fraud?

Everyone with a clear eye knows that it’s almost impossible for just the top management to carry out such a series of fraud operations, especially over three years.

Image source: Company website

The collapse of ST Changjiang, with over 50k yuan inflated revenue and profit over three years, also implicates intermediary and auditing agencies.

In recent years, the auditing firm for ST Changjiang was Zhongshen Asia Pacific, a well-known accounting firm, which had issued unqualified opinions and non-standard audit opinions for the company.

Image source: China Securities Journal

Generally speaking, once a listed company commits financial fraud, there’s a vested interest chain involving the audit firm, sponsor institution, and the company, with a high risk of violations.

History has shown similar patterns before.

Previously, the official disclosed that Meishang Ecology had committed financial fraud for nine consecutive years, with the female boss colluding with private equity firm GF Securities to manipulate stock prices. The intermediary received over 50k yuan in premiums to help Meishang Ecology “fake its listing.”

Image source: China Securities Regulatory Commission

Another scandal-ridden company, Evergrande, left a trail of messes, with astronomical financial fraud. Its auditor, PwC, earned 27.74 million yuan, and after the scandal broke, was heavily fined 325 million yuan.

Image source: China Securities Regulatory Commission

Even domestic top 100 accounting firms like Yongtuo Group have assisted listed companies in “financial fraud” multiple times, with violations ranging from minor to severe, and fines for companies and partners ranging from 200,000 to over 57 million yuan.

Image source: Jiangsu Securities Regulatory Bureau official website

Originally, intermediary agencies and accounting firms were “gatekeepers,” but instead of maintaining professional integrity, they became accomplices in financial fraud, with many listed companies fined for fraud, and the behind-the-scenes pushers heavily penalized.

Image source: Xinhua Finance

But whether it’s a “ST Changjiang” fined 41 million yuan or securities institutions fined tens of millions, heavy penalties are just a means, not the ultimate goal.

Image source: Wind

Famous brokerage firms colluding with listed companies to fake data created many market illusions, but in the end, only innocent investors and shareholders suffer.

Image of netizens’ comments

Compared to heavy fines for fraud, penalties are mainly a warning and deterrent. The real losers are the shareholders and investors—can they recover the money they invested with real cash?

Delisting countdown

Tens of thousands of shareholders may lose everything

Now, with three years of fraud, “ST Changjiang” has entered the delisting countdown, and actual delisting is not far off.

But innocent shareholders and investors are more concerned about whether they can get their money back.

Image source: Company website

In fact, delisting does not mean exemption from liability. Shareholders can handle their stocks during the restructuring period or file claims.

However, it’s worth noting that while claims may recover some losses, most delisted companies are insolvent, and the amount recovered depends on the company’s assets and repayment ability.

Image source: Company announcement

In other words, for companies forcibly delisted like “ST Changjiang,” some shareholders can apply for compensation, but they must prove they bought the stock during the period of financial fraud, and that they were deceived by false statements, and keep relevant evidence.

Image source: Company announcement

There are successful cases of claims, such as Kangmei Pharmaceutical, which also committed three years of fraud. The court issued China’s first special representative lawsuit for securities disputes, ordering compensation for 25,000 investors totaling 2.459 billion yuan—averaging less than 50k yuan per person.

Image source: Shaanxi Securities Regulatory Bureau

For shareholders, compensation of less than 50k yuan per person might not even cover their initial investment. While claims are an option, they rarely fully compensate for all losses.

More cruelly, after many companies collapse, most are severely insolvent, with few valuable assets left. For shareholders, recovering losses is often a “pipe dream.”

In large part, after a company delists, shareholders’ money may be “lost in the water.”

Image of “ST Changjiang” shareholders as of September 2025

For the tens of thousands of investors in “ST Changjiang,” their stocks may be worthless, but some may recover a little money. Overall, they will still suffer significant losses.

So, as always, investing involves risks. The stock market is unpredictable—don’t expect to get rich overnight, and don’t be fooled by the glossy financial reports of listed companies.

Final words

Ultimately, from the “ST” label on Changjiang Pharmaceutical to entering the delisting countdown, in this three-year-long financial fraud scheme, ordinary shareholders and investors are more like pawns in the hands of capital—any misstep could lead to total loss.

A carefully designed Ponzi scheme was exposed, and the once thriving giants fell one after another. The “ST Changjiang” fined 41 million yuan is not an isolated case nor the last pharmaceutical listed company to fall.

Image source: China Securities Regulatory Commission

This is not only a tragedy for an old-listed pharmaceutical company but also a tragedy for the people and the country.

Seven subsidiaries bankrupt, 14 senior executives fined 31 million yuan, the company fined 10 million yuan and forced to delist—ultimately, the victims are the shareholders and ordinary people.

Therefore, “investment must be cautious” is not just a slogan but a warning. Always remember: don’t wait until you suffer losses and regret!

Special statement: The above content only reflects the author’s personal views or positions and does not represent Sina Finance Headlines’ opinions or positions. If you need to contact Sina Finance Headlines regarding copyright or other issues, please do so within 30 days of the content’s publication.

Massive information, precise analysis, all on Sina Finance APP