China’s stock market good future U.S. stocks fell 28% after the market. The company announced that employees had been found to be have acted inappropriately in routine internal audits and that employees may have mistakenly expanded sales figures. Good Future says it found a violation of an employee’s “light-level” business. Good Future Education Group said it had identified some “employee misconduct” during a routine internal audit. The employee has been detained by the local police.
Good Future suspects that problem employees colluded with external suppliers to falsify documents such as contracts and misrepresent “Light Class” sales figures. “Light Class” sales account for 3% to 4% of the company’s total revenue in fiscal 2020.
This is the third recent incident in which China’s shares have reported a false increase in revenue.
Earlier, Luckin Coffee said an independent special committee found that COO and some of its employees had engaged in certain misconduct since the second quarter of 2019. The survey showed that Luckin’s sales related to counterfeit transactions were about Rmb2.2bn in the second quarter to fourth quarter of last year.
In addition, Wolfpack Research reported today that Aichi is exaggerating the number of users. Wolfpack Research said in a report that its research shows that Edge committed fraud long before the 2018 IPO. Like many other companies that do IPOs at inflated prices, Aichi cannot legally grow its business and publish true financial statements. We estimate that Aichi has increased its revenue by about Rmb8-13 billion, or 27%-44%, in 2019.
In this regard, Ai Qiyi said, about today’s third-party agency issued a report questioning Ai Qiyi, its reference data and conclusions are seriously inaccurate, inconsistent with the actual situation, as a responsible listed company, we disclose all financial and operational data are true, in line with SEC requirements, we for all false allegations, firmly deny, and retain the right to pursue the law.