Sante Cableways fined 10.5 mln yuan for information disclosure violations, ex-controller banned for life

On the evening of September 18, SanTe Cable (002159) released an Administrative Penalty Decision that settled the accounts on a fund misappropriation case dating back three years. The company was fined 10.5 million yuan, former actual controller Ai Luming was ordered to disgorge 11 million yuan, and received a lifetime ban from the securities market.

How the Funds Were Diverted

The matter dates back to 2019. At that time, SanTe Cable's indirect controlling shareholder was still the Dangdai Group. Due to the Dangdai Group's own financial strain, SanTe Cable began transferring funds to accounts designated by the Dangdai Group as recipients. These funds ultimately flowed to the Dangdai Group and its related parties and partners, constituting non-operational fund misappropriation by related parties.

The Hubei Securities Regulatory Bureau uncovered striking figures:

• 2019: Non-operational fund misappropriation between SanTe Cable and the Dangdai Group totaled 1.423 billion yuan, equivalent to 133.49% of the net assets recorded in the annual report for that year. In other words, the misappropriated amount exceeded the company's entire net worth, though the funds were repaid by year-end, bringing the book balance to zero.

• 2020 (August–December): The company failed to timely disclose 340 million yuan in fund transfers to the Dangdai Group, representing 31.89% of the most recent audited net assets.

• 2021: This figure jumped to 1.904 billion yuan, or 131.67% of net assets.

• January 2022: An additional 500 million yuan was transferred, accounting for 34.58% of net assets.

None of these transactions were disclosed in periodic reports or through temporary announcements. It was not until April 30, 2022, in response to a letter of concern from the Shenzhen Stock Exchange, that SanTe Cable first disclosed the matter in its reply. By that month, all misappropriated funds and interest had been fully recovered.

The Penalty

Ai Luming, the then actual controller, was found to have repeatedly instructed SanTe Cable to provide financial support to the Dangdai Group. Regulators determined this constituted "actual controller directing illegal conduct," with violations spanning four years and involving significant amounts and proportions. Critically, Ai Luming had already been subject to securities market entry bans previously — meaning the maximum penalty was not unexpected.

Lu Sheng, the then chairman, argued that he had "signed under duress." Regulators rejected this defense, stating that he was not only aware of and participated in the approval and signing process, but also failed to stop or report the conduct during its occurrence, and subsequently allowed the violations to continue. They concluded that his actions "did not reach the level of loss of free will" and declined to mitigate his penalty.

The final penalties were as follows:

• SanTe Cable: Warning + 10.5 million yuan fine
• Lu Sheng: Warning + 3 million yuan fine
• Ai Luming: 11 million yuan fine + lifetime market ban
• Zhang Quan, Wang Lili, Zhang Yunyun and other responsible individuals also received penalties.

A Three-Year Investigation

This penalty did not come out of nowhere. In August 2023, SanTe Cable announced it was under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure laws — more than a year after the fund misappropriation was first disclosed. In March 2026, the company received an Advance Notice of Administrative Penalty, with proposed penalties largely consistent with the final decision. Six months later, the formal decision was issued.

Notably, around the time the investigation was launched, SanTe Cable had already changed hands. In June 2023, Wuhan High-Tech State-Owned Holding Group took control through a "share transfer + voting rights waiver" arrangement, with the East Lake High-Tech Development Zone Management Committee becoming the new actual controller. This transition transformed SanTe Cable from a privately controlled to a state-controlled listed company. SanTe Cable was the first listed company under the High-Tech Group's control.

Signs of Recovery

While the penalty was being finalized, SanTe Cable's operational landscape had already changed significantly.

Affected by the fund misappropriation and the pandemic, the company's revenue in 2022 was only 256 million yuan, with a net loss attributable to shareholders of 76.76 million yuan. After the state-owned entity took over, operations gradually recovered:

• 2023: Revenue of 719 million yuan; net profit attributable to shareholders of 128 million yuan — a return to profitability
• 2024: Revenue of 692 million yuan; net profit attributable to shareholders of 142 million yuan
• 2025: Revenue of 638 million yuan, down slightly by 7.81% year-on-year; net profit attributable to shareholders of 143 million yuan; recurring net profit of 144 million yuan — still recording positive growth

However, the impact of the fine has already appeared in the 2026 interim report. In the first half of 2026, the company reported revenue of 288 million yuan, down 1.6% year-on-year, and net profit attributable to shareholders of 58.72 million yuan, down approximately 20% — the company had already accrued the fine expense in its half-year report.

Regarding future impact, SanTe Cable's response remains consistent: all production and operations are normal, and the penalty will not have a material impact.

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