Leshi and founder Jia Yueting facing investigation for disclosure violations
Apr 30, 2019
Chinese video streaming company Leshi Internet Information & Technology and its troubled founder, Jia Yueting, are under investigation for suspected information disclosure violations.
Leshi said in a regulatory filing (in Chinese) on Monday night that it has received two investigation notices issued by securities watchdog China Securities Regulatory Commission (CSRC) on April 26 and 29 this month. The company said in the filing that it will cooperate with the investigation and disclose information as needed.
A company spokeswoman TechNode contacted did not respond to inquiries about the nature of the violations.
The investigation notice is just the latest of the company’s recent woes. The Shenzhen board-listed company’s shares were suspended (in Chinese) last Friday after releasing bleak results in its 2018 annual report, which showed net assets of negative RMB 3.4 billion and RMB 11.9 billion of debts.
Leshi may face delisting if its 2019 annual report fails to meet regulatory demands.
Jia, the controlling shareholder of Leshi, is also ladened with a massive debt exceeding RMB 7 billion (in Chinese). While he no longer heads Leshi, he still holds around 920 million worth of shares in the company as of April, most of which have been frozen by the court or pledged as collateral.
Jia was placed on a blacklist for defaulting on loans in 2017 as LeEco, the parent company of Leshi, struggled with mounting debt. Jia fled China for the US and has not returned since. According to Chinese media, Jia may be forced to end his self-exile because of the investigation and return to China.
Faraday Future, Jia’s electric vehicle venture once hailed as the “Tesla of China,” has also been struggling with financial issues. After resolving its feud with Chinese real estate giant Evergrande last year, lawsuits were filed against the firm by its suppliers and contractors seeking nearly $80 million in back payments, damages, and fees. In December, it was reported that 33% of Jia’s stake in the EV startup was temporarily frozen.