Analysis of the Information Disclosure Controversy Involving *ST Lifang and Its Impact on A-Share ST Sector Governance

Based on the information obtained, I will conduct a systematic analysis of the information disclosure controversy involving *ST Lifang and its impact on the A-share ST sector from multiple dimensions.

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According to a notice from the Shenzhen Stock Exchange, on January 19, 2026, due to information about Lifang Digital Technology Co., Ltd. (Securities Abbreviation: *ST Lifang, Securities Code: 300344) appearing in public media, which may have a significant impact on the company’s stock trading price, the company’s stock was suspended from trading at the opening of the market on January 19, 2026, and will resume trading after the company discloses a clarification announcement through designated media [1].

• Controversy Focus
  : Media reports on the company’s risk warnings and open letter to shareholders were not authorized or confirmed by the company
• Company’s Position
  : The company and its board of directors were unaware of and not involved in the content of the reports
• Regulatory Intervention
  : The Shenzhen Stock Exchange initiated the suspension procedure in accordance with the “GEM Stock Listing Rules”

This type of information disclosure controversy reflects the prevalent governance weaknesses in the ST sector of the A-share market:

Risk Type	Specific Manifestations	Involved Cases
Information Disclosure Violations	Failure to disclose related-party fund occupation and financial fraud in accordance with regulations	*ST Huilun, Jushi Chemical, etc.
Uncontrolled Media Information	Unauthorized dissemination of “risk warnings” or “open letters”	*ST Lifang Incident
Internal Control Failure	Loopholes in decision-making approval, financial accounting, and related-party transaction management	*ST Erya, etc.

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Since 2025, regulatory data shows that the A-share ST sector has the following typical governance defects:

• In 2025, a total of over 80 listed companies were placed on file for investigation due to illegal and irregular information disclosure [2]
• Nearly 80 listed companies received administrative penalty decisions
• 15 companies triggered the red line of mandatory delisting due to major illegal acts, setting a historical record [2]

Violation Type	Typical Cases	Penalty Measures
Related-Party Fund Occupation	*ST Huilun, *ST Erya	Total fines exceeding RMB 20 million
False Recording of Financial Data	Jushi Chemical, *ST Huilun	Dual penalties on the company and responsible persons
Concealment of Related-Party Relationships	Tibet Everest	Controlling shareholder and responsible persons penalized
Irregular Performance Forecasts	8 companies including *ST Qibu and *ST Pengbo	Warning letters and orders to rectify

Tian Xuan, Dean of the National Institute of Finance at Tsinghua University, pointed out that the current strict supervision of listed companies has three major characteristics: wide coverage, strong intensity, and improved precision [3]:

1. Wide Coverage
   : Extending from financial fraud to various issues such as related-party fund occupation and violations by controlling shareholders
2. Strong Intensity
   : Implementing a “dual penalty system”, where individual fines are even higher than those imposed on companies (for example, in the *ST Huilun case, the actual controller was fined RMB 4 million, while the company was fined RMB 3 million) [2]
3. Improved Precision
   : “Pursue the principal culprit and punish accomplices”, precisely targeting responsible subjects such as actual controllers, directors, supervisors, and senior executives

Trend Manifestations	Specific Changes	Market Impact
More Prudent Behavior of Senior Executives	Senior executives of listed companies choose not to engage in matters that “can be done or not”	Reduction of edge-case behaviors
Accelerated Resolution of Problems	The number of delisted companies in 2025 hit a new high in recent years	Purification of the market environment
Lowered Delisting Thresholds	The new delisting rules (implemented in January 2025) increase the intensity of delisting for poorly performing companies	Cleaning up “zombie enterprises”

Governance Dilemma Chain: Declining operating performance → Tight cash flow → Fund occupation by controllers → Information disclosure violations → Regulatory penalties → Delisting risk → Further deterioration of governance

*Typical Case — ST Erya:

• 2024 revenue reached RMB 330 million, a year-on-year decrease of 27.42%
• Net loss in the first three quarters of 2025 reached RMB 35.6823 million
• Failed to truthfully disclose related-party transactions exceeding RMB 100 million with the actual controller
• Received a fine of RMB 9.7 million, and the actual controller was banned from the market [4]

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The phenomenon of “unauthorized and unconfirmed media reports” in the *ST Lifang incident exposes the chaotic state of information dissemination in the ST sector:

• Investors find it difficult to distinguish between true and false information
• The boundary between insider information and public information is blurred
• The timeliness and transparency of the company’s clarification announcements are insufficient

Trust Erosion Factors	Specific Manifestations	Impact on Investors
Frequent Financial Fraud	Fabricated procurement and sales, inflated revenues and profits	Doubts about the authenticity of financial data
Unfulfilled Promises	Promises to “remove ST/delisting risk warnings” fell through	Lost confidence in the improvement of the company’s fundamentals
Accumulated Delisting Risk	Increase in delisting cases due to share price falling below par value (accounted for over 75% in 2024) [3]	Concerns about principal loss

From 2025 to 2026, major breakthroughs have been made in investor rights protection mechanisms, providing paths to repair damaged trust:

Mechanism Type	New Developments	Coverage
Ordinary Litigation	Infotronics Case (*ST Infotronics): First-instance judgment ordered compensation of RMB 7.4224 million to 159 investors	No pre-requisite administrative penalty required
Special Representative Litigation	Jintongling Case: Judgment ordered compensation of RMB 775 million to 43,269 investors	Centralized litigation, one-time judgment
Advance Compensation	Guangdao Digital Case: Minmetals Securities contributed RMB 210 million for compensation	Fast and efficient, no litigation required

• Special representative litigation allows small investors to “unite to protect their rights without taking individual action” [5]
• The advance compensation cycle is significantly shortened, allowing investors to obtain relief quickly
• After the cancellation of the pre-requisite procedure, the cycle for investor rights protection has been greatly shortened

According to the Bank of America Asia Fund Manager Survey, investors are returning to the Chinese market, but their attitude towards the ST sector is becoming more cautious [6]:

• Institutional capital is flowing out of ST companies with deteriorating fundamentals
• Analysts are more conservative in their ratings of ST companies
• The valuation discount has widened

Change Trend	Specific Manifestations	Investment Impact
Increased Risk Awareness	Declined enthusiasm for speculation in ST stocks	Reduced blind following
Improved Information Discrimination Ability	Focus on information about regulatory penalties and case filings for investigation	Avoid problematic companies
Awakened Awareness of Rights Protection	Actively follow the progress of compensation litigation	Proactively assert rights

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1. Reputational Damage
   : Even after the clarification announcement is released, market trust has already been damaged
2. Trading Interruption
   : Loss of liquidity during the suspension period, making it impossible for investors to trade
3. Regulatory Escalation
   : May trigger stricter regulatory scrutiny

Single incident → Sector trust crisis → Reassessment of valuation system → Adjustment of capital allocation

Improvement Direction	Specific Measures	Expected Effect
Information Source Control	Establish an authentication mechanism for official information release channels	Reduce the dissemination of unauthorized information
Clarification Timeliness Requirements	Shorten the response time to major public opinions to T+1	Reduce damage caused by information asymmetry
Accountability Mechanism	Hold accountable for false “risk warnings”	Purify the information environment

Improve internal control → Standardize information disclosure → Regulate related-party transactions → Enhance the credibility of financial data

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• The *ST Lifang incident is a typical microcosm of the governance dilemmas in the ST sector
• The characteristics of “tough and stringent” regulation are increasingly prominent, promoting the resolution of historical issues
• Under the logic of “using penalties to drive rectification”, high-quality ST companies are expected to accelerate rectification and self-rescue

• Information disclosure controversies exacerbate short-term trust crises
• However, the improvement of rights protection mechanisms provides institutional support for long-term trust repair
• The investor structure is expected to shift from speculative hype to value investment

• It is expected that a considerable number of ST companies will still be placed on file for investigation or penalized
• The number of delisted companies may continue to increase
• Investors’ risk appetite for the ST sector will remain low

• The ST sector will undergo a “survival of the fittest” process
• Surviving companies will have more robust governance structures
• The market’s valuation logic for ST companies will shift from “shell value” to “fundamental value”

For investors, the following should be focused on:

1. Regulatory penalty developments, avoid problematic companies
2. Substantial evidence of improvement in the company’s fundamentals
3. Progress of rights protection litigation, seize compensation opportunities
4. Changes in industry policies, identify structural opportunities

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[1] Jiemian News - Shenzhen Stock Exchange: *ST Lifang’s Stock Suspended Temporarily, to Resume Trading After Company Discloses Clarification Announcement (https://www.jiemian.com/article/13900644.html)

[2] Securities Times - 6 Fines at the Start of the Year Unveil the New Normal of A-Share Regulation (https://www.stcn.com/article/detail/3591468.html)

[3] 21st Century Business Herald - Strict Supervision Fully Intensified in 2024: Nearly 100 Listed Companies Fined (https://www.21jingji.com/article/20241220/herald/74903897bffbcecedeafbede90c3aaf2.html)

[4] Sina Finance - *ST Erya Receives RMB 9.7 Million Fine for Information Disclosure Violations Amid Sustained Operating Pressure and Long-Standing Governance Flaws (https://finance.sina.com.cn/jjxw/2026-01-14/doc-inhheyvm4535906.shtml)

[5] China Business Journal - Three Key Tools Continue to Be Implemented, Transforming Investor Rights Protection from “Single Channel” to “Multiple Channels” (https://finance.eastmoney.com/a/202601173622291628.html)

[6] Wall Street CN - Bank of America Asia Fund Manager Survey: Investors Are Returning to China (https://wallstreetcn.com/articles/)

This report is compiled and analyzed based on public information. For the latest content of the clarification announcement of *ST Lifang (300344), please refer to the information disclosed by the company through designated media. Investing in companies in the ST sector requires special attention to risks and prudent decision-making.