US regulator is investigating Iqiyi for financial fraud Chinese video-streaming platform Iqiyi said Thursday that it is under investigation by US authorities over a short report released in April which accused the company of inflating 2019 revenue by up to 40%.
Why it matters: US regulators are more actively investigating allegations against Chinese companies for financial fraud after beverage chain Luckin Coffee admitted in April it had fabricated transactions in 2019 totaling around RMB 2.2 billion (around $317 million).
- The US is increasingly scrutinizing Chinese companies as lawmakers call for stricter audit requirements. US President Donald Trump has also recently threatened to delist from American stock exchanges Chinese companies that do not comply with US accounting standards.
Details: Baidu-backed Iqiyi said in a statement announcing its second-quarter earnings on Thursday that it is cooperating with the Securities and Exchange Commission (SEC) probe, which is seeking financial and operating records dating from January 2018.
- The top US financial market regulator is also seeking “documents related to certain acquisitions and investments that were identified in a report issued by short-seller firm Wolfpack Research in April 2020,” the company said.
- Iqiyi said it had hired advisers to conduct an internal review of the key allegations in the Wolfpack report “shortly” after it was released.
- Shares of the company tumbled as much as 19% on Thursday on the disclosure.
https://technode.com/2020/08/14/us-regulator-is-investigating-iqiyi-for-financial-fraud/