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VTRON's $1.3B fund missing, lawsuit filed by SEC

丁不三
丁不三
2023-12-26

Recently, a 'Notice of Filing' issued by the China Securities Regulatory Commission has once again stirred up waves,VTRON is once again in the public eye.

Overview of the Event:

On the evening of December 22, 2023, VTRON announced that the company had received a "Notice of Filing" from the China Securities Regulatory Commission on December 22. The commission decided to file a case against the company for suspected illegal and irregular information disclosure. Additionally, a case was filed against Liu Jun, the proposed acquirer, for alleged violations of information disclosure regulations.

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VTRON Swift Self-Examination: In the recent period, the company conducted a comprehensive self-examination of its finances, funds, information disclosure, and personnel changes. Through this examination, it was revealed that on September 20, 2023, the controlling shareholder of the company, Zhejiang Zhongshu Wei Ke Equity Investment Partnership Enterprise (Limited Partnership) ("Zhongshu Wei Ke"), signed a "Equity Transfer Cooperation Framework Agreement" with Jiangxi Xiling Energy Co., Ltd. ("Xiling Energy").

According to the agreement, Xiling Energy is expected to acquire control of Zhongshu Wei Ke through investment relations within the next 12 months. The actual controller of Xiling Energy, Liu Jun, transferred 1.33 billion yuan of the company's funds to his controlled bank account through a joint account from September 28 to October 27, 2023. The full amount was returned to the company on October 31, but from November 1 onwards, funds were gradually withdrawn from the company, and as of the disclosure date of this announcement, the funds have not been returned.

Furthermore, the announcement disclosed that Zhang Shuhan, the current secretary of the board of directors of VTRON, submitted a resignation report to the board on November 3, 2023. Independent director Zhang Wendong submitted a resignation report to the board on November 30, 2023. The resignation information of these two individuals has not been publicly disclosed as the company is under investigation.

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Translation of Comments:

CSRC says: Where's the money? I saw you moved it.

VTRON: We'll investigate ourselves.

VTRON: Yes, the money was moved. Moreover, in November, our two big brothers voluntarily reduced their holdings. We haven't had the chance to explain.

Let's look back a bit:

On October 10 this year, the company's director, board secretary, and deputy general manager Chen Xiang resigned due to work adjustments. Company CEO Lu Yu also resigned, along with CFO Zhou Feng.

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On October 31, Deputy General Manager Chen Xiaomeng resigned from the company but continued to serve as a director.

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In short, starting from October, there was a wave of resignations among those in charge.

In any case, the situation is deep, the plot is complex, without commentary or narration, and now no one can clearly explain the true situation. Perhaps there will be new developments every day.

Case Evaluation:

The details of the case have been disclosed to the public.

However, the money has been moved and not returned!

The stock, affected by this, hit the daily limit down! Investors are forced to step on a landmine, powerless! Conventionally speaking, it's time for criticism – criticizing the regulatory authorities, criticizing these companies for their lack of integrity and violation of rules, and questioning why such incidents repeatedly occur without being eradicated.

But this time, I don't want to criticize.

As long as you've been in this market long enough, you'll understand that a company going bankrupt is not uncommon in the A-share market. It's just a bankruptcy, and veteran investors are already accustomed to it.

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There are too many similar stories and incidents, too many to criticize each time.

Every time I see such a thing, I always ask myself: If I encounter such a tragedy, how would I seek justice and recover losses?

After all, as long as you've been in this market for a long time, no one dares to guarantee that they won't encounter such unexpected disasters.

If a heavily-invested stock encounters a bankruptcy, it's a complete loss!

It's sweet when there's no bankruptcy, but after bankruptcy, it becomes bitter.

Case Summary:

At this point, it's time to say the old saying that has calloused our ears: Don't put all your eggs in one basket.

We've heard this saying since childhood, but there are too few people who can truly understand and follow it.

From the moment we converted money into stocks, we signed a risk agreement with the market, assuming the risk of future bankruptcies! For example, a market-wide bankruptcy – do you remember when the A-share market almost hit the daily limit down on February 3, 2020, when the COVID-19 outbreak just began?

Fundamental bankruptcy of a company – remember the once high-flying horse, Jia Bu Shi's LeTV?

Sudden changes in external conditions – under the China-US trade war, ZTE, a core player in 5G with a market value of hundreds of billions, directly hit the daily limit down 7 times!

Sudden negative news for individual stocks – last Friday's collective drop in the gaming sector is a recent example! This trend continues this week.

Sudden bankruptcy – the most memorable is the New Capital Hotel back then, 15 consecutive daily limit up (ST, 5%), then 18 consecutive daily limit down, delisted! Most software companies can no longer be seen now because it delisted long ago. This is something that happened in the A-share market and it's terrifying!

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When we put ourselves in, we can imagine the brutal and terrifying scenes!

15 consecutive 5% daily limit up, profit doubled but then halted. Most people might think there are still ten thousand daily limit ups, eagerly calculating the subsequent development. However, when trading resumed, there were 18 consecutive 10% daily limit down, leading to delisting!

The extreme highs and lows between heaven and hell brought unimaginable torment to investors! Traders can gamble on profit opportunities in the market, but they must always be vigilant.

A single misstep can lead to a complete loss if heavily invested in a minefield! In the face of such a sudden tragedy, the only way to survive is strict risk management.

Only then will we be thankful for our risk management system. Even if an investment goes bankrupt, it's only a part of the portfolio, painful but not fatal.

After all, the position is also a kind of disguised risk-reward ratio.

These are some reflections on the bankruptcy of VTRON. If this article can serve as a reminder in the face of such incidents, then these words have meaning. Wishing everyone in the stock market good fortune!

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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