Chemical products manufacturer ShengdaTech listed via a reverse merger in 2006. In March 2011, the company announced that its auditor KPMG had encountered discrepancies during the FY10 audit. This included the verification of sales, customers and cash. The announcement prompted a collapse in the company's shares. In April, KPMG resigned citing a lack of response in addressing the issues from senior management. In October 2021, the company's special committee (which had been established to investigate the claims) confirmed KPMG's initial reports. ShengdaTech FY09 financials triggered both our Fake Cash Flow Fraud and Excess Capital Raising models. The company is a confirmed fraud which was likely hiding fake profits in large cash balances.

Last updated November 2021

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