Case Study On Financial Fraud Of The Shenxianyuan Company In The NEEQ Market

The NEEQ market is applied to provide share transfer service for unlisted small and medium-sized enterprises.Since the expansion of the NEEQ market in 2013,the scale of listed company has increased rapidly,and by the end of 2016,the number has exceeded 10,000,which means China's OTC market has entered to the accelerating development stage.However,the massive increase in the number of listed companies has also caused the situation that companies with poor asset quality sneaking into the NEEQ market.Thus,the SFC and the NEEQ began to strengthen supervision of listed companies to dispose issues like illegal information disclosure.The NEEQ company Shenxianyuan received the "The Decision of Administrative Penalty" from the SFC in July 2016.Due to its behavior such as incomplete calculation of cost and exaggerated profit brought by related transaction income,the company becomes the first listed company of the NEEQ market that has been punished for financial fraud.The methodology of this thesis uses the theoretical analysis and case study.Based on the analysis of the financial fraud cases,this thesis first demonstrates the relevant contents of the financial fraud while introducing the development process,the current system and the difference between the NEEQ and the floor market.Secondly,for the case study part,the overall review of the company's general information and its financial fraud provides the basis for the following analysis.This thesis analyses the financial fraud case from several perspectives and focuses on its subjective motivation,objective conditions,means and impacts.The analysis result shows that the company's desire for financing is the main motivation of its financial fraud.The flawed corporate governance,the imperfect market system,the broadly disclosure requirements and the careless brokers have provided external condition.The company reduced the cost and related transactions for financial fraud.Enormous negative impacts on the NEEQ market has been brought due to th is issue.Finally,the thesi s summarizes related suggestions,which including: standardize the construction an d implementation of the system to ensure the independence of the company;improve the NEEQ hierarchical system to promote the delisting mechanism and ensure the well operation of the market;enhance the adequacy of information disclosure and refine the information disclosure system,reinforce the intensity of punishment for illegal information disclosure;improve the quality of the core work and implement good self-examination,thus to play a positive sustained role in the supervision of listed companies.Through these revelations,the quality of listed companies can be improved to effectively reduce the occurrence of financial fraud,to avoid the loss of the interests of investors,which will further help improve the operation mechanism of the NEEQ market and effectively realize the optimal resources configuration function of the market.