On December 31, 2025, Deren Electronics (002055), a leading A share connector manufacturer, received an Advance Notice of Administrative Penalty from the Shenzhen Regulatory Bureau of the CSRC.
Due to falsified operating receipts over 2020–2022, the company will be subject to an “Other Risk Warning”. Its stock abbreviation will change from “Deren Electronics” to “ST Deren”（ST=Special Treatment）. Trading will be suspended for one day on January 5, 2026, and when it resumes on January 6, 2026, the daily price fluctuation will be limited to ±5%.
This three-year financial fraud not only plunged the veteran connector company into a trust crisis, but also sounded a compliance alarm across the fast-growing connector industry.
Enforcement Implemented: The $76.7 Million Fictitious Receipts Fraud Timeline
The investigation by the Shenzhen Regulatory Bureau revealed that the financial fraud at Deren Electronics was orchestrated by the actual controller, Qiu Jianmin, who was serving as Chairman and CEO at the time.
From 2020 to 2021, due to major customers facing financial difficulties and unable to repay debts, Deren Electronics experienced tight cash flow.
Qiu Jianmin, the company’s actual controller and then Chairman & CEO, used his personal funds and external loans to provide financial support to customers, subsidiaries, and equipment suppliers, who then repaid historical debts to Deren Electronics.
This “fund-circulation” operation was not reported to the company regarding the actual source of funds, resulting in fictitious receipts of ~$56.6 million USD in 2020, $16.2 million USD in 2021, and $3.85 million USD in the first half of 2022, totaling over $76.7 million USD over three years.
In June 2022, Qiu Jianmin arranged for a Deren Electronics subsidiary to provide funds indirectly to an associated company via prepayments, which were then used to repay Deren Electronics’ financial support funds. This operation resulted in fictitious receipts of $3.85 million USD in the first half of 2022.
Over the three-year period, the total fictitious receipts exceeded $76.7 million USD, directly causing false records in the company’s 2020 and 2021 annual reports as well as the 2022 interim report.
Furthermore, the non-public issuance documents disclosed in January 2022, which relied on falsified financial data, also constituted a violation of information disclosure regulations.
It was not until April 2024 that Deren Electronics issued an accounting error correction notice, retrospectively adjusting the financial statements for the relevant years.
The adjustments included:
1. 2020: increased credit impairment loss by $53.2 million USD and capital reserve by $46.0 million USD
2. 2021: increased credit impairment loss by $9.51 million USD and capital reserve by $62.2 million USD
3. First half of 2022: increased credit impairment loss by $0.73 million USD
Penalty Details: The $3.2 Million Fine and Full-Chain Market Ban Accountability
A warning was issued to Deren Electronics, along with a fine of approximately USD 994,000.
Qiu Jianmin, the mastermind behind the fraudulent activities, was given a warning and fined a total of approximately USD 1,704,000 (including about USD 568,000 as the directly responsible executive and about USD 1,136,000 as the actual controlling shareholder), and was additionally banned from the securities market for five years.
The then President Qiu Yang and Chief Financial Officer Rao Qi were fined approximately USD 284,000 and USD 213,000 respectively, bringing the total amount of penalties to about USD 3,195,000.
The company’s announcement clarified that the penalties violate provisions of the “Shenzhen Stock Exchange Listing Rules (2025 Revision)”, but do not constitute a major violation that would trigger a forced delisting.
As of the announcement date, Deren Electronics stated that its production and operations remain normal, and that it has initiated internal control optimization and other rectification measures. The company plans to apply to the Shenzhen Stock Exchange to remove the “Other Risk Warning” 12 months after the administrative penalty decision is issued.
Conclusion
Industry insiders note that in 2015, Deren Electronics acquired the Italian company Mida. The “integration difficulties” of this cross-border merger may have contributed to cash flow pressures and several consecutive years of losses. The company previously told investors that:
“The losses from Meta System S.p.A and the substantial asset impairment caused by its divestment led to significant losses in 2024. However, this allows the company to shed the burden of operating losses and enter a healthy development track.”
Following the divestment of Meta System S.p.A, Deren Electronics achieved operating revenue of $468.5 million USD in the first three quarters of 2025, with net profit attributable to shareholders of $10.39 million USD, representing a year-on-year increase of 157.68%.
The company successfully turned losses into profits while maintaining rapid growth, with significantly improved profitability, a qualitative improvement in net profit margin compared to the same period last year, and continuously optimized core operating metrics.
The implementation of this penalty marks the gradual resolution of the over-one-year investigation risk, clearing historical issues, and allowing the company to focus on its core business and deepen its presence in the high-speed transmission connector segment. Deren Electronics is now entering a new phase of lean operations, efficiency improvement, and quality-driven growth.