Dong Dengxin: 1 Dollar Delisting Rule And A Share "Wolf Coming".

The US stock market has the highest market delisting mechanism, of which the $1 delisting rule is the most distinctive and deterrent.

It is the most important benchmark and logo in the US stock market delisting rule. It gives investors the right to decide the delisting of junk stocks. Investors can make the junk shares into the floor of $1 under the concerted action of "voting with feet", which will be forced to withdraw from the market without any other reason.

According to the research conducted by Professor mcquill of the Yale Law School in the United States over the years, the three major markets of the New York Stock Exchange (main board), the American Stock Exchange (SME board) and the NASDAQ (GEM) have been totally delisted from 9273 to 11 years from 1995 to 2005.

More than half of the automatic delisting, and nearly half of the reasons, were forced to go to the market because they did not reach the standard.

With the continuous improvement of the "financial management level" of listed companies, especially the substantial increase in the level of "report regrouping" of junk companies, they soon found the secret and artifact of avoiding the delisting standard: two years' loss of profits and a year's profit; and then a two-year loss of life and a year's profit, so that they kept on going back and forth. Even if "insolvent" was on the verge of bankruptcy, even if only 7 people went to work, they would still "die without delisting", because they could not achieve the "sole and lowest" delisting standard for "three consecutive years of losses", so this regulation was soon discovered by institutions and investors.

As a result, junk stocks are not going to be delisted, and the frying and reorganizing game is becoming more and more intense. The market is becoming more and more frantic, and the market is becoming more and more fierce. It seems that the more rubbish they get, the more they will compete with the securities and Futures Commission. They will not withdraw from the stock market, because a large number of junk stocks can be suspended for 5 to 7 years, and then they will miraculously return to the market. Implementation of the new delisting system

The shocking episode took place in 2013: the 16 super junk stocks that had been suspended for three or five years changed the fate of the delisting overnight because of the "amnesty". They were allowed to concentrate two times in bulk and bulk up to be listed. This is the most spectacular spectacle of the A share market in the past 26 years: the garbage collective riots! In fact, even the idiots understand that in the 16 super junk stocks, even if the "suspension of listing" has been five to seven years, it can still be dead without delisting. Its secret is to use the name of asset reorganization to carry out "report reorganization" and play a game with regulators.

In order to crack down on financial fraud and fraud, the securities and Futures Commission launched the third delisting system reform in 2014. There are two main additions: first, encourage the initiative to withdraw; second, the implementation of major illegal companies.

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Major violations mainly include two types of situations, one is fraud issuance, and the other two is illegal disclosure of major information.

If a company or its controlling shareholder or actual controller is suspected of issuing a fraud, if "before" or after the administrative penalty is imposed by the SFC, it will repurchase or purchase all the new shares according to the public commitments, and compensate the economic losses of the small and medium-sized investors.

Since January 1, 2016, the new regulation of IPO has not only cancelled the prepayment system for subscription of new shares, but also arranged the advance compensation mechanism for sponsor agencies.

If the issuer produces false documents, misleading statements or major omissions in the production and issuance of the initial public offerings, the investor will compensate the investors for losses.

The first of the content and format standard of the company's information disclosure of publicly issued securities, the prospectus (revised in 2015), clearly stipulates that "the sponsor's commitment to compensate investors for losses caused to investors is due to false records, misleading statements or omissions of the documents issued by the issuer for the initial public offering of shares."

If we say, the first two rounds of the reform of the delisting system are set financial indicators.

The third round of the delisting system reform will focus on combating fraud issuance and disclosure of major information, especially financial information fraud, and "zero tolerance" for fraud issuance.

This is the vigour of the regulators, and the majesty and deterrence of the law.

As the first "early adopter" who was forced to withdraw from the market as a fraudulent issue, Xintai electric caught up.

Xin Tai Electric officially entered the gem in January 27, 2014. In July 14, 2015, Xintai electric received the notice of investigation of the China Securities Regulatory Commission (15069).

Because the company suspected of violating the securities laws and regulations, according to the relevant provisions of the securities law of the People's Republic of China, it decided to investigate the company on file.

On the day of the investigation, the stock price closed at 13.65 yuan. This is the stock market ecosystem with Chinese characteristics! Are you afraid? I'm not afraid! Do you believe Xintai Electric will really be delisted? Is it possible? This is a story of "wolf coming"!

Here comes the wolf, the wolf is coming! This time the stock owners believe that Xintai Electric has been finished. It can not only "resume the listing", nor can it be "listed again", but it may go bankrupt and liquidate. But the shareholders will not believe that they are the last stick. They are still more daring and more foolish than the others after gambling. They are also making more money on the next trading day. This habit of thinking is not changed overnight. This is the only explanation for the sudden death of the game. This is the "gambling culture" bred by the rules of the A share game. It has great inertia! Wolf

The final conclusion is: what kind of system and what kind of investors to cultivate.

Only the registration system reform can enable IPO to be efficient and low cost, so that no one can chew the shell reorganization game. It can enable investors to vote automatically with "feet". It can make junk shell shell resources worthless and allow the price of junk stocks to return to the floor, allowing the 1 yuan delisting method to shine brilliance. In addition to the registration system reform, we have no other way. IPO registration system is the embodiment and symbol of the spirit of marketization, legalization and internationalization, and it is the true embodiment of "market decision".