Core Viewpoint - The company Sier Te (002538.SZ) is under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure, stemming from a prolonged embezzlement case involving its former financial director, which has created significant governance and financial reporting issues [1][2]. Group 1: Investigation and Governance Issues - The investigation was triggered by allegations against Huang Xili, the former financial director of the wholly-owned subsidiary Guizhou Lufang Industrial Co., who is suspected of embezzlement and has refused to cooperate with the investigation [1]. - Two directors, Wu Yuguang and Zhu Keliang, have expressed their inability to guarantee the authenticity and completeness of the company's financial reports due to the ongoing investigation and potential undisclosed fictitious transactions [2]. - The Anhui Securities Regulatory Bureau's inspection revealed that Guizhou Lufang had inflated costs through fictitious labor and engineering projects from 2021 to 2023, leading to inaccurate periodic reports [2]. Group 2: Financial Performance and Internal Control Failures - In the first half of 2025, the company reported a revenue increase of 7.15% to 2.183 billion yuan, but net profit plummeted by 43.6% to 95.18 million yuan, attributed to rising raw material costs [3]. - Concerns have been raised regarding the historical impact of fictitious business activities and the significant non-operational fund occupation by related parties, amounting to 176 million yuan, indicating a failure in internal controls [3]. - The company's situation reflects a typical path of internal control failure in A-share companies, characterized by subsidiary misconduct, executive cover-ups, ineffective auditing, and superficial rectification efforts, leading to a complete loss of trust [3].