Core Viewpoint - *ST Zitian has been heavily penalized by the regulatory authority for serious financial fraud, including fabricating revenue and obstructing regulatory enforcement, leading to significant legal and financial consequences for the company and its management [1][19]. Financial Fraud Details - The financial fraud involved methods such as fictitious business operations and the use of gross revenue recognition instead of net revenue, which significantly inflated reported income [2][8]. - In 2022, *ST Zitian inflated its revenue by 778 million yuan, accounting for 44.59% of its reported income, through fictitious SMS services and improper revenue recognition in advertising [9][10]. - The company continued fraudulent practices into 2023, inflating its revenue by 207 million yuan in the first half of the year and 1.72 billion yuan in the annual report, with the latter accounting for 78.63% of reported income [10][11]. Regulatory Actions and Consequences - The company faced multiple penalties, with 12 current and former executives fined approximately 40 million yuan, and two key individuals banned from the market for life [1][14]. - *ST Zitian is at risk of three types of delisting due to its financial misconduct, including "normative delisting" for failing to rectify significant accounting errors and "major illegal delisting" for two consecutive years of false reporting [15][17]. Investor Impact and Legal Actions - Investors have begun filing civil compensation lawsuits against *ST Zitian, reflecting a growing trend of legal action against companies involved in financial fraud [4][21]. - Regulatory bodies are enhancing protections for investors affected by fraudulent activities, including mechanisms for advance compensation and commitments from responsible parties to ensure timely restitution [22].