(Yicai) Dec. 26 -- The actual controller of Amethystum Storage Technology, as well as the person acting in his concert, have been arrested for having manipulated the Chinese optical storage high-tech firm’s financial statement, which was used to apply for an initial public offering in Shanghai.

Zheng Mu and his associate Luo Tiewei are the first to be found guilty of financial statement manipulation since China introduced the registration-based IPO system in February, the Meizhou, Guangdong province-based company announced yesterday.

Such incident, which will probably lead to a change in actual controller, will have a major adverse impact on Amethystum’s operation and production, the firm noted, adding that it is still uncertain whether the incident will influence the company’s financial status.

Between 2017 and 2020, when Amethystum went public on the Shanghai Stock Exchange, the company exaggerated its business revenue by over CNY700 million (USD98 million) and falsified profit of over CNY370 million by faking contracts, counterfeiting logistics orders, and recognizing revenues ahead of time, Amethystum said in April.

Afterward, the China Securities Regulatory Commission fined Amethystum about CNY36.7 million (USD5.1 million), permanently banned Zheng from the stock market, and fined him CNY21.6 million. Luo received a fine of about CNY18 million and a 10-year ban from the stock market. Moreover, Amethystum was delisted on July 7.

Amethystum was listed on the SSE’s Nasdaq-like Star Market on Feb. 26, 2020. On its first trading day, it closed at CNY78.24 (USD10.96) per share, achieving a market capitalization of around CNY14.9 billion (USD2.1 billion). On its last trading day, it closed at 64 Chinese cents (9 US cents).

Editor: Futura Costaglione