Investors affected by inaccurate financial reporting can now pursue claims after Derun Electronics received a regulatory penalty notice, with specific eligibility criteria established for compensation.
The company disclosed on December 25, 2024, that it and its actual controller had received a Case Filing Notice from the China Securities Regulatory Commission (CSRC). Subsequently, on December 31, 2025, the Shenzhen Regulatory Bureau issued an Advance Notice of Administrative Penalty, marking a new phase in legal recourse for damaged investors. Those who purchased shares between August 27, 2020, and December 30, 2023, and held them through December 31, 2023, or sold at a loss afterward, are eligible to participate in the claim process. (Access the Derun Electronics claim portal.)
The Advance Notice of Administrative Penalty detailed the specific information disclosure violations. Regulatory investigations found that Derun Electronics provided inaccurate disclosures in its 2020 and 2021 annual reports. Due to financial difficulties among some customers, the company faced increased cash flow pressure as clients delayed repayments. During this period, Qiu Jianmin used personal funds and external loans to assist certain customers, former subsidiaries, and suppliers in repaying historical debts to the company, but the actual source of these funds was not disclosed to Derun Electronics.
As a result, the 2020 and 2021 annual reports contained false records, including inflated repayments, understated credit impairment losses, and misstated capital reserves. Additionally, in the first half of 2022, Qiu Jianmin arranged for a subsidiary to indirectly provide funds to an associated company through advance payments, used to settle prior obligations, leading to inaccurate financial information in the semi-annual report for that period.
These issues affected the disclosure quality of Derun Electronics' 2020 and 2021 annual reports, as well as the 2022 semi-annual report. Furthermore, certain financial data cited in the company's 2022 non-public issuance documents was also impacted. In April 2024, Derun Electronics issued an accounting error correction announcement, retrospectively adjusting prior-year financial data. This included increasing credit impairment losses by 371 million yuan and capital reserves by 321 million yuan for 2020, and increasing credit impairment losses by 66.39 million yuan and capital reserves by 434 million yuan for 2021.