Core Viewpoint - The article discusses the disciplinary actions taken by the Hong Kong Stock Exchange (HKEX) against Fuhong Hanlin and its former CEO Liu Shigao for failing to fulfill due diligence obligations regarding an investment management agreement that misallocated IPO proceeds [2][8]. Group 1: Disciplinary Actions and Violations - Fuhong Hanlin received a reprimand from HKEX, and Liu Shigao was required to undergo 26 hours of compliance training due to his failure to review a significant investment management agreement [2][8]. - The investment management agreement allowed 29% of the IPO proceeds, amounting to $117 million (approximately 840 million RMB), to be used for investments, which was not disclosed until 2022 [3][7]. - Liu Shigao did not participate in the agreement's establishment process and failed to present it to the board for review, violating corporate governance standards [8][9]. Group 2: Financial Details and Recovery Efforts - As of the end of 2024, Fuhong Hanlin still had $66.36 million (approximately 470 million RMB) in unrecovered investment funds [4][11]. - The company had initially raised a net amount of HKD 31.47 billion (approximately $4.03 billion) during its IPO, with the funds intended for clinical trials and operational expenses [6][7]. - Fuhong Hanlin has taken legal action to recover the outstanding investment amount, which has been recorded as accounts receivable in their financial statements [14]. Group 3: Investment Management Agreement and Misuse of Funds - The investment management agreement was established with a firm that used the funds to purchase bonds and commercial papers from private entities, raising concerns about potential conflicts of interest [3][13]. - The HKEX noted that the investment management project did not align with the intended use of IPO proceeds as outlined in Fuhong Hanlin's prospectus [8]. - An independent investigation revealed that the investment management firm had previously sued Fuhong Hanlin for breach of contract, indicating ongoing disputes over the management of the funds [12][13].

Core Points - The Hong Kong Stock Exchange (HKEX) reprimanded Fuhong Hanlin (02696.HK) and its former CEO Liu Shigao for failing to fulfill due diligence obligations regarding a significant investment management agreement from 2019, which involved $117 million (approximately 840 million RMB) of IPO proceeds being misallocated [2][4][5] - As of the end of 2024, Fuhong Hanlin has $66.36 million (approximately 47 million RMB) in unrecovered investment funds [3] - Liu Shigao has been mandated to undergo 26 hours of compliance training to continue serving as a director of a company listed on the HKEX [2][6] Investment Management Agreement - The investment management agreement, signed by the CFO on the first day of the IPO, allowed the investment of $117 million through a third party, which was not disclosed to the public until 2023 [4][6] - HKEX stated that the investment did not align with the intended use of IPO proceeds as outlined in Fuhong Hanlin's prospectus, which was primarily for clinical trials and operational expenses [5][6] - The funds were fully utilized by the third party to subscribe to bonds and purchase promissory notes from private entities, raising concerns about potential conflicts of interest [11][12] Recovery Efforts - Fuhong Hanlin has been attempting to recover the investment since 2020, but as of 2024, a significant portion remains unrecovered [3][9] - The company has taken legal action to recover the outstanding investment amount, which has been classified as accounts receivable in their financial statements [13][14] - The independent investigation revealed that the company’s personnel genuinely aimed to achieve capital preservation through low-risk investments during the idle period of IPO funds [12][13] Corporate Governance - Liu Shigao's lack of involvement in the agreement's establishment and failure to ensure compliance with listing rules led to the reprimand from HKEX [6][7] - Fuhong Hanlin has experienced a high turnover of CFOs, with four changes since its IPO in 2019, indicating potential instability in financial oversight [13] - The company has acknowledged the need for improved governance and compliance practices following the reprimand [2][6]

Core Viewpoint - The article discusses the downfall of Xiong Xiong, the chairman of Shanyuhai Group, who was previously celebrated for his motivational speeches but is now under investigation for illegal fundraising activities, highlighting the risks associated with high-return investment promises [1][2][4]. Group 1: Company Background - Shanyuhai Group, founded by Xiong Xiong, is a wellness and tourism enterprise focusing on high-end health services, with operations in real estate, e-commerce, overseas finance, and mining [10]. - The company has developed over 70 wellness bases domestically and internationally, offering vacation services and charging membership fees [10]. Group 2: Investment Products and Promises - Shanyuhai's main projects include residential properties in Zhoushan, promising annual rental returns of approximately 8% and additional profit-sharing options [13]. - The company also operates a financing leasing platform, providing rental services for electronic products with returns of 9.9%-12%, but investors have reported difficulties in withdrawing funds since March [15]. Group 3: Legal Issues and Investigations - The company is currently under criminal investigation for illegal fundraising, with law enforcement taking action against its branches in Hangzhou and Shanghai [4]. - The investigation was triggered by issues related to its internet finance projects rather than its real estate offerings [13]. Group 4: Market Context and Risks - The article notes a trend of similar investment firms facing legal troubles due to unsustainable high-return promises, leading to significant financial losses for investors [18]. - The case of Shanyuhai Group reflects broader concerns in the investment landscape, where companies often lack solid underlying assets and may operate as Ponzi schemes [18].