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Consumer Discretionary

Zungui Haixi Corp (ZUN/H CN)

Year: 2011

Chinese sportswear company Zungui Haixi (Zungui) listed on the Toronto Stock Exchange in December 2009. Less than two years later, in August 2011, Zungui announced that its auditor, Ernst & Young (E&Y), had suspended its audit owing to irregularities when conducting bank confirmation procedures. In September, the company's CFO and independent directors resigned because the special committee formed to investigate the allegations had been prevented from fulfilling its mandate. E&Y resigned shortly thereafter. The Ontario Securities Commission banned the remaining directors from acting as directors or officers of any issuer in Canada. The company is a confirmed fraud. Faked profits were likely hidden in large cash balances and receivables. 

Last updated November 2021

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