Regulatory scrutiny over listed companies continues to intensify across the board. On the evening of March 20 alone, six listed companies were subjected to investigations or penalties.

Among them were *ST Aowei, which faced a new investigation, ST Dongshi and Hongtao 3 (Shenzhen Hongtao Group Co., Ltd.), which received prior notices of administrative penalties, as well as ST Mingcheng, *ST Mubang, and R Changkang 1 (Changjiang Runfa Health Industry Co., Ltd.), which were issued final administrative penalty decisions.

As indicated by their stock symbols, these companies are already grappling with serious issues. Some are under ST (special treatment) warnings, while others are on the brink of delisting with *ST status, and a few have already been delisted yet still face severe penalties.

What common issues do these six companies share?

On March 20, the capital market witnessed another wave of regulatory penalties. *ST Aowei, ST Dongshi, ST Mingcheng, and *ST Mubang, along with the delisted R Changkang 1 and Hongtao 3, disclosed regulatory updates on the same day, involving investigations, prior penalty notices, and final penalty decisions.

The simultaneous targeting of six companies in one night is no coincidence—it highlights two core common issues currently under regulatory focus: financial fraud and fund misappropriation.

Financial fraud is the most severe and widespread malpractice, with several companies implicated. *ST Mubang’s case is particularly alarming: its subsidiary fabricated sales of silicon materials and monocrystalline furnaces, leading to an overstatement of total profit by 159 million yuan in its 2023 annual report, accounting for 536.60% of the reported profit. This means *ST Mubang actually incurred a loss but fraudulently presented a profit.

ST Dongshi failed to account for its subsidiary’s land leasing business in 2022, resulting in overstated profits of 9.4029 million yuan and 18.931 million yuan in its semi-annual and annual reports, respectively. Notably, although the company issued a correction notice in April 2024, this subsequent action did not exempt it from penalties.

The delisted Hongtao 3 also misrepresented its earnings forecast, projecting a net loss of 350–650 million yuan for 2023 in January 2024, while the actual loss amounted to 1.404 billion yuan—a significant discrepancy.

ST Mingcheng’s financial fraud was more concealed and persistent. Its 2021 annual report inflated revenue by 98.42 million yuan through La Liga copyright deals and understated impairments on inventory and goodwill by 98 million yuan and 213 million yuan, respectively, cumulatively overstating total profit by 409 million yuan and severely distorting its financial performance.

The other major common issue is non-operational fund occupation by related parties and illegal guarantees, which depletes listed companies’ assets and harms minority shareholders’ interests.

The delisted R Changkang 1 is a prime example. Since 2021, the company and its subsidiaries channeled funds to its controlling shareholder, Runfa Group, via intermediary bank accounts and bill transfers. In 2022, the occupied funds accounted for 79.01% of its disclosed net assets. To conceal this, R Changkang 1 underreported liabilities by 1.188 billion yuan, 1.188 billion yuan, and 1.353 billion yuan in its 2021 annual report, 2022 annual report, and 2023 interim report, respectively.

*ST Aowei is also mired in fund misappropriation, with approximately 189 million yuan still outstanding as of December 2025, alongside illegal guarantees for entities controlled by its actual controller.

ST Dongshi faces dual issues and has been investigated twice—in December 2023 and May 2025. In 2021, it purchased new energy vehicles from related parties worth 429 million yuan, and in 2023, it repaid 128 million yuan in financing principal and interest on behalf of affiliates, constituting non-operational fund occupation.

Hongtao 3, already delisted, failed to disclose the judicial freeze on its controlling shareholder’s shares in a timely manner, and its chairman was aware but did not organize disclosure—a major information omission.

Behind the密集 penalties lie three key regulatory signals.

Beyond common issues, each company exhibits distinct violations, reflecting deeper regulatory trends.

From *ST Aowei’s delisting on the same day as its investigation to ST Dongshi’s repeated probes and penalties even for delisted firms, three clear signals emerge.

Signal 1: Financial fraud is strictly pursued, and voluntary corrections do not exempt companies from penalties.

ST Dongshi exemplifies this. It was penalized for overstating profits by 9.4029 million yuan and 18.931 million yuan in its 2022 reports, representing 30.97% and 82.33% of disclosed profits. Despite issuing a correction in April 2024, the company and three responsible individuals were fined 4.4 million yuan in total.

Similarly, ST Mingcheng issued an accounting correction in June 2022, but still faced penalties of nearly 15 million yuan for inflating revenue and underreporting impairments in 2021. This shows regulators focus on whether violations occurred, not just whether they were concealed.

Signal 2: Delisting does not absolve liability; investigations continue regardless of listing status.

*ST Aowei was delisted on March 20 due to its market value falling below 500 million yuan for 20 consecutive days, becoming a case of “investigation-triggered delisting.”

Even long-delisted companies remain under scrutiny. Hongtao 3 and R Changkang 1, delisted in August 2024, were still penalized. R Changkang 1 and its controlling shareholder were fined 25.5 million yuan, with individuals fined 27.8 million yuan, and its former chairman and vice chairman banned for life. Hongtao 3 was fined 13.4 million yuan for disclosure failures and false forecasts. This signals that delisting is not a “get-out-of-jail-free card.”

Signal 3: Misappropriated funds must be returned, but repayment does not avoid penalties.

*ST Mubang’s case is illustrative. In 2024, it had 1.204 billion yuan in non-operational fund transactions with related parties, representing 128.98% of its audited net assets. Although the funds were repaid by November 2025, the March 20, 2026 penalty still cited “failure to disclose related-party transactions” as a key violation. The company and six individuals were fined 22.5 million yuan, with its actual controller fined 8 million yuan and banned for six years. This indicates a shift from mere recovery to “penalize first, repay or not.”

These three signals reflect a regulatory approach characterized as “comprehensive, zero-tolerance, and high-deterrence.” The simultaneous actions against six companies demonstrate that cracking down on disclosure violations has become a consistent, high-pressure campaign. Whether involving fraud or fund misuse, regardless of listing status or voluntary corrections, crossing the line will incur consequences. This sends a clear message to the market and strengthens investor protection.