Amethystum Storage faces delisting after US$5 million fine for accounting fraud, raising questions over rash of tech listings

Chinese optical storage firm Amethystum Storage faces a delisting from Shanghai’s Nasdaq-like tech board amid a fraud investigation, two years after its initial public offering and raising concerns over the rapid increase in listings amid the country’s drive towards greater technology self-reliance.

The China Securities Regulatory Commission, the country’s securities watchdog, has fined Amethystum Storage 36.7 million yuan (US$5.1 million) for fabricating sales and profit figures in its prospectus and failing to disclose its external guarantees to investors, according to a company filing over the weekend.

CSRC notified the company of the penalty on Friday and warned that it may be forced to delist from Shanghai’s Star market, the company said in its filing. The company has not received a formal decision yet on delisting and will fully cooperate with the CSRC, it added.

Back in 2020, Amethystum Storage was the first optical storage firm to list on the Shanghai Star market, the exchange board dedicated to technology and innovation companies, and its stock price rose nearly threefold on its debut. However, the company is down 94 per cent from a peak on the first day of trading.

Amethystum Storage’s fall from grace has raised concerns about a crop of tech companies that have chosen to list amid China’s drive to achieve greater independence in strategic technologies. For example, the semiconductor sector – a core area in this vision amid US trade sanctions – has been hit by a rash of fraud and corruption investigations related to the country’s Big Fund, which is dedicated to the capital-intensive chip industry.