The sudden stock price movement of ST Infotech conceals multiple underlying crises; suspected disclosure issues have already triggered investor claims.

How Can AI Disclosure Issues Trigger Chain Reactions of Investor Claims?

On the evening of April 2, ST Yingfeituo (002528) released an announcement titled “Announcement Regarding Abnormal Stock Trading Fluctuations and Risk Warning.” The announcement shows that the company’s stock closing price has had a cumulative increase of more than 12% in its deviation value over three consecutive trading days (March 31, April 1, and April 2), and according to relevant regulations, this falls under the circumstances of abnormal stock trading fluctuations.

In response to the abnormal share-price movement, ST Yingfeituo issued multiple risk warnings in the announcement. Among them, based on preliminary calculations by the finance department, the company expects that its net assets at the end of 2025 will be negative. If the company’s audited net assets at the end of 2025 are indeed negative, then, in accordance with the Shenzhen Stock Exchange’s relevant provisions, the company’s stock trading will be subject to a delisting risk warning after the disclosure of the 2025 annual report (“*ST”).

In addition, ST Yingfeituo and its wholly owned subsidiaries also face the issue of overdue bank loan debts. The total overdue principal and interest are approximately 4.89 billion yuan. The company is actively communicating with creditor institutions to explore practical and feasible solutions and to strive for a proper resolution of the above-mentioned overdue debt matters. However, whether the overdue debt issue can ultimately be resolved remains uncertain.

From the regulatory perspective, on January 24, 2025, the company received from the China Securities Regulatory Commission its “Notice of Filing for Case Investigation,” for suspected violations of information disclosure laws and regulations. As of now, the company has not yet received any conclusive opinions or decisions from the China Securities Regulatory Commission regarding this matter.

And this is not the first time ST Yingfeituo has run into information disclosure issues. On December 28, 2023, the company received an “Administrative Regulatory Measures Decision” issued by the Shenzhen Securities Regulatory Bureau. The Shenzhen Securities Regulatory Bureau pointed out that, from 2019 to 2020, parts of the company’s revenue recognition did not match the business basis. In 2020, some accounts receivable involved fictitious recoveries, which led to inaccurate financial report figures for the relevant years.

The above-mentioned violations have triggered multiple lawsuits for investor claims. According to an announcement released on January 9 this year, the company’s related lawsuits involve 477 investors, and the total claim amount reaches 23.6228 million yuan. Among them, in 159 cases, a first-instance judgment held the company liable to pay 7.4224 million yuan (the company has filed an appeal); additionally, in 10 cases, a settlement agreement was reached, under which the company will pay 0.2936 million yuan.

Based on the prior administrative penalty and the latest filing for case investigation, lawyer Liu Peng of Shanghai Huzhi Law Firm said that, at present, there are two categories of investors who have the opportunity to claim compensation from the company:

First, investors who bought ST Yingfeituo stock between April 30, 2020, and April 29, 2024, and were still holding the stock as of the close of trading on April 29, 2024; second, investors who bought ST Yingfeituo stock on or before January 24, 2025, and were still holding the stock as of the close of trading on January 24, 2025.

Investors who meet any one of the conditions above may register and submit information through the public account “Dazhong Securities News” (feature code: 11). The final claim eligibility shall be determined by the court.