The China Securities Regulatory Commission (CSRC) has imposed a staggering penalty exceeding 238 million yuan on Yuandao Communication for severe violations, including fraudulent issuance and false disclosures in its annual report. The enforcement action, detailed in an administrative penalty decision published on September 4th, also targets the company's former chairman and other responsible individuals.
Founded in September 2008, Yuandao Communication is a nationwide, comprehensive telecommunications technology service provider. Its core operations focus on communication network maintenance, optimization, construction, and ICT services. The company was listed on the Shenzhen Stock Exchange's ChiNext board in July 2022, but was placed under investigation by the CSRC in July 2025.
Where the violations began
The regulatory findings reveal two primary categories of misconduct. First, the company fabricated significant false content in its securities issuance documents. Between October 12, 2020, and June 28, 2021, Yuandao Communication repeatedly disclosed draft versions of its initial public offering (IPO) prospectus. A subsequent version was filed on July 28, 2021, followed by multiple registration drafts between November 12, 2021, and June 8, 2022, covering the reporting period from 2019 to 2021. After receiving approval on June 13, 2022, the company officially listed on July 8, 2022, raising total proceeds of 1.169 billion yuan from the offering.
The investigation uncovered that from 2019 to 2021, Yuandao Communication inflated its operating revenue through methods such as fabricating work volume confirmation forms. The inflated amounts totaled 65.9026 million yuan, 161 million yuan, and 264 million yuan respectively, representing 8.75%, 13.12%, and 16.23% of the revenue figures disclosed in the prospectus for those years. This constituted the creation of materially false content in the company's public issuance documents.
False annual report disclosures
Second, the company's 2022 annual report contained false information. Through similar methods of fabricating work volume confirmations, Yuandao Communication overstated its operating revenue by 166 million yuan, which accounted for 7.87% of the revenue reported for that fiscal year.
Based on the nature, circumstances, and social harm of these violations, the CSRC has decided to issue a warning and impose a fine of 238.84 million yuan on Yuandao Communication, while mandating corrective actions. Additionally, the former chairman, Li Jin, has received a warning, a 7.5 million yuan fine, and a five-year market entry ban. The former general manager, identified as Yan, who has passed away, is exempt from penalties. The former vice president, chief financial officer, and board secretary, Cao Yalei, has been issued a warning, fined 6 million yuan, and banned from the securities market for four years. The former director and vice president, Wu Zhifeng, has received a warning and a 3 million yuan fine.
Following the company's stock ticker change to *ST Yuandao after resuming trading on May 12, the Shenzhen Stock Exchange issued an advance notice on August 31 indicating its intention to terminate the company's listing due to the major violations meeting mandatory delisting criteria. Trading in the stock has been suspended since August 31. Prior to the suspension, shares were trading at 3.31 yuan, representing a decline of over 80% for the year, with the company's total market capitalization shrinking to 402 million yuan.