Want the Unexpected? I Didn't Expect It Either
If a listed company is accused of falsifying financial reports, even if it was a highly sought-after "golden stock" in the Stock Market just a moment ago, it can become a "junk stock" in just one second.
"Junk stocks" are stocks without value. The market's understanding of a listed company's operations mainly comes from the financial reports it releases in each period.
It will contain detailed business information and a final, accurate conclusion, including how much money they made, how much money they lost, their assets, the effectiveness of their operations, and so on.
People outside the company, and even those inside the company, may not have a comprehensive understanding of it. In addition, this is a society that values trust, and people are willing to believe that listed companies would not engage in the malicious act of altering data. Therefore, few people question the accuracy of a listed company's financial statements.
They also lack avenues for questioning; even if they feel something is amiss, they have no way or opportunity to unravel the mystery in their hearts.
However, it must be said that for listed companies, financial fraud is like standing on the edge of Active Volcano volcano; even if they don't die from the fall, they will be burned to death.
After Neo finished speaking, a lot of voices came through the phone receiver. He could tell that these people were not in good condition, but he didn't care because he and his wife's father were no longer the largest shareholders of the company.
If something really goes wrong, the father-in-law and son-in-law will certainly not escape, but the other shareholders will not fare any better. They will also face bankruptcy. This is why Neo is convinced that even if he tells them, these people will not inform on him.
"Neo, Olbun, this is a crime!"
"I'm going to report you!"
Soon, the voice of the largest shareholder of Board of Directors Listoan Group, filled with uncontrollable emotion, came through the phone. His voice was hoarse and trembling.
Neo remained remarkably calm, replying with a joking tone, "You can hang up now and then call to report me for falsifying the financial statements."
"I believe the Federal Financial Crime Investigation Bureau, the Revenue Service, and the media will be very interested in your report!"
The Federal Financial Crime Investigation Bureau), a branch of the Federal Bureau of Investigation, is an independently operating agency that investigates and combats all financial crimes.
Neo's words unexpectedly silenced the largest shareholder. After about four or five seconds of silence, other members of the Board of Directors immediately began to comfort him, saying that if this man were to lose his mind and suddenly do something like that, everyone would be killed by him.
After a brief attempt at persuasion, the major shareholder made only one request. "You must explain your purpose in doing this. If you cannot convince me, I will immediately report your illegal activities..."
The statement sounded very fierce, but it was actually just a threatening way of putting it, Neo certainly knew how to take that approach.
"Of course, sir, that's exactly what I wanted to tell everyone, because it relates to some of our next steps."
"In fact, starting three years ago, Listoan's profits began to shrink rapidly, and it suffered its first loss about two years ago..."
To put it simply, President Neo discovered that Listoan was experiencing some problems: cash flow was slowing down, inventory was piling up, and people had less money in their pockets, leading to a decline in spending power. It was inevitable that a Group Company with hundreds of brands would face the same problems as smaller businesses.
Neo and Olbun, along with his confidants, believed this was not a simple phenomenon. At their request, the Finance Department revised the financial reports for the first time, turning losses into sustained profits and even showing growth points.
Neo quickly got the result he wanted by making this decision: the stock of the Listoan Group continued to rise in the Stock Market, and the increase in stock price made the losses negligible.
In his own words, the surge in the Group Company's overall market value, driven by rising stock prices, was enough to offset the operating losses, according to the annual summary report.
This is a poison pill. While the company's physical operations are constantly losing money, it uses the soaring stock price to cover up the fact that it is not doing well. It may seem like a good thing that the stock price is rising, but all of this is based on false data.
Today, two years of financial fraud would be enough to bring Listoan down in an instant. Neo didn't even try to hide anything, telling all the shareholders in a rather cold and cruel way that he and his father-in-law Olbun, had cashed out almost half of their shares.
In other words, the shares they currently hold are no longer sufficient for them to maintain their current position.
Despite the shareholders' anger and curses, Neo and Olbun were unconcerned and even a little smug.
Of course, there are actually many criminal acts involved, which is why Neo and Olbun still hold the positions of Chairman of the Board and president of the group. They want to clear their names, and the best way to do so is to ensure that their illegal operations are not investigated.
"From what I understand right now, Listoan is actually in a very dangerous situation, which is why I'm pressing Landon so hard..."
Landon is the name of the mayor of Sabine City.
Neo sat in a chair in the study, holding a high-end solid-color cigarette in one hand and a phone in the other. His eyes were somewhat unfocused, as if the smoke from the solid-color cigarette had blinded him, making it impossible for him to see what was in front of him, or as if his gaze had pierced through reality and entered a void.
"Only by acquiring Heng Hui's most important core resources can Listoan quickly transform and thus gain a glimmer of hope."
"Our secret negotiations with Heng Hui were already halfway through, but the Federal Revenue Service's sudden investigation brought our plans to a halt. Without pressuring Landon, we wouldn't have had a chance to pull ourselves out of this mess. But as it stands now, we've failed!"
Heng Hui's shareholders have planned to withdraw their funds and return to their home countries for post-war reconstruction. Those businesses and channels that were very valuable in the past have now become tools for them to monetize.
If the Federal Revenue Service hadn't intervened, Listoan might have already gotten what they wanted.
Unfortunately, everything was destroyed.
The conversation on the phone was very calm, with only some heavy breathing sounds. No one knew that Listoan's condition had deteriorated to such an extent. In the outside world, the mere name of the Group Company was something that many people were proud of.
In this state, everyone is proud to be an employee of the Listoan Group! It's truly hard to imagine that such a company, according to Neo, is on the verge of bankruptcy.
Actually, this can't be considered an accident. When Listoan's sales started to slow down, it was destined that they would face a harsh winter.
With tens of thousands of workers, the monthly wages alone amount to millions, but their cash flow and profit-making speed has become too slow.
On the one hand, they laid off some employees to save costs, and on the other hand, they used financial fraud to inflate stock prices and then obtained the necessary funds by cashing out.
A significant portion of the funds that Olbun and Neo cashed out was actually invested in the company's operations. Of course, they lent the money to the company in the name of a third party; they weren't as selfless as some people might think.
Neo was pleased with the silence of the crowd; now everyone was basically united. He then went on to talk about some of his own thoughts. "I've been in contact with people on the Conservative Party side. They're easier to talk to Landon, and they agree with some of my views and ideas about the current changes in the industrial structure. They're willing to try to cooperate with us."
"They offered very favorable policies, and more importantly, it was an opportunity, an opportunity to get rid of the burden."
"We will get rid of those workers and employees who are sucking our blood, and leave with our wealth, so that everything we have done before will be without any problems."
"More importantly, I ask you not to do anything. As soon as the market opens on Monday, there will be rumors that Landon and I have a serious falling out and that the governor dislikes Listoan."
"At that time, our stock price will drop rapidly. I ask you to sell some of your shares to lower the stock price. After the authorities intervene, I will announce the privatization plan."
"Then... we can leave here at our leisure, and I assure you that none of your net worth will shrink drastically."
This was a method that Neo and Olbun had discussed for a long time before coming up with. Their initial idea was to get the things they had previously agreed on with Heng Hui, quickly integrate Heng Hui's channels and advantageous industries, and reactivate the projects they had in their hands after the merger.
But the current situation doesn't allow it, so let's take a different approach and leave the company's core members here, while also leaving some troubles behind locally.
When people talk about Listoan, they won't say that certain people caused the company to leave. They can even use Landon and the governor's dislike of them to make their departure seem political.
As for financial fraud, those who know about it won't say anything, and those who want to bring them down won't know anything about it.
It's a perfect plan, and even if someone does raise these issues in the future, the final outcome will be nothing more than a fine, just a small amount of money, and they might even get away with it, becoming a very typical example of financial operations!
As long as the Group Company and shareholders do not hold him accountable, he will not even need to be punished—after privatization, he will only be responsible to the shareholders, and as long as the shareholders indicate that they will not hold him accountable, he will not be sued.
Of course, that's all for the future; what they need to do now is get through this difficult time!
He felt that what the governor's aide said was right: only by "unity" could they overcome the difficulties. That's exactly what he's doing now: uniting the Board of Directors members and working with them to complete this rapid transformation!