St. Leda's Financial Fraud Case Analysis

China's securities market started late and has a short history,but the cases of financial fraud are still emerging.These financial frauds have had a strong impact on the capital market,which not only harms the interests of investors,but also is not conducive to the distribution of social resources.Therefore,strengthening the research on financial fraud,early prevention,strict regulation of the prevention and governance of financial fraud in China,is essential to promote the healthy and orderly development of the capital market.This paper selects St.Leda Electric Co.,Ltd.(hereinafter referred to as “St.Leda”)as a case of financial fraud.The first is to introduce the basic situation of the company and to review its fraudulent incidents and punishment results.Then it elaborates on the financial fraud means of inflating the operating income,mainly the fictitious film and television copyright transfer agreement,inflating the non-operating income and With the cooperation of the local government,the fictional subsidy was changed.Secondly,based on the four factors of fraud,the research on the causes of financial fraud in St.Leda is followed by the analysis of financial fraud from internal and external factors.The external factors mainly include the relationship level and the industry level.The internal factors mainly include the organizational management level.The business strategy and financial results level will help industry regulators and accounting firms to identify companies suspected of fraud through effective monitoring.And combined with the local protectionism theory to analyze the particularity of the means,mainly through the use of false litigation,the use of related parties to remit payment and collusion with local governments.Finally,in view of the fraud characteristics presented in this example,the supervision suggestions are proposed from the government level,the audit level and the legal level,which can provide reference for the governance of financial fraud: in terms of corporate governance,improve corporate governance structure and improve risk management;at the level of external regulatory agencies such as accounting firms,we can improve auditing measures to detect companies suspected of fraud and prevent them from causing market damage more harm;at the local government level,change the development concept and correctly position the relationship between the government and themarket.Standardizing the relationship between government and enterprises will help improve the investment environment and restore the function of optimizing the allocation of market resources.at the legal level,promote the IPO registration system,improve the delisting system,and increase the punishment for financial fraud,in order to maintain a good order in China's securities market and protect the vital interests of small and medium investors.The St.Leda's financial fraud is novel,occult,and has many stakeholders involved in conspiracy to defraud.Therefore,the research on this case can supplement the theory of financial fraud motivation and financial fraud identification analysis,and in the prevention of fraud.Strengthen supervision.