AutoBeta(AutoBeta.net)01/19 Report--

On the evening of January 17, Shanxi Securities issued a notice saying that the holding subsidiary Zhongde Securities received a civil complaint served by the Beijing Financial Court, demanding Leeco to compensate for a total of 4.571 billion yuan in investment losses caused by its misrepresentation, and asked the other 20 defendants, including Sino-German Securities, Sino-Thai Securities, Ping an Securities and so on, to bear joint and several liability. On January 18, Shanxi Securities issued another announcement, and Sino-German Securities, a controlling subsidiary, received the "notice of filing a case" from the China Securities Regulatory Commission because the sponsor business was suspected of violating the law and regulations in Letv's non-public stock offering project. China Securities Regulatory Commission decided to file a case against Sino-German Securities.

According to the data, Leeco was founded in November 2004 and listed on the gem in August 2010. it became the first IPO listed company in the industry, with a maximum market capitalization of 165 billion yuan at its peak. In October 2016, the capital chain crisis of Letv system broke out, and the stock price began to fall all the way. In May 2017, Letv laid off staff and suffered debt collection from suppliers. Two months later, Jia Yueting left Leeco to help raise money for FF and left the United States, but has not returned home. In 2019, Jia Yueting divided his shares in FF to creditors because of the debt crisis. In July 2020, Jia Yueting posted an apology letter entitled "working a Business, restarting my Life, with my apology, gratitude and commitment" on Weibo.

In April 2019, Leeco disclosed its 2018 results showing that its net worth was negative. In the same month, the China Securities Regulatory Commission announced that Leeco and Jia Yueting had decided to file an investigation against Leeco and Jia Yueting on suspicion of illegal information disclosure. In May 2020, the Shenzhen Stock Exchange announced the termination of the listing of Leeco shares. However, Leeco can still trade on the old third board after delisting. In February 2021, Leeco changed its name to Leeco 3 and opened trading on the old third board. Of course, unlike the motherboard, the trading time in the first half of the year is every Monday, Wednesday and Friday, with a limit of 5%. After the opening, Leeco 3 rose by the limit almost every day, and more than 70 trading days were staged in 85 trading days, an increase of 1240%.

Leeco 3 continues to rise because, on the one hand, the market capitalization is low and easy to pull up, on the other hand, FF cooperates with Geely in the hope that FF will make it and revive Letv. On January 29th, FF and Geely Holdings announced that the two companies have signed a cooperation framework agreement to cooperate in the areas of technical support and engineering services, and to explore the possibility of a joint venture between Geely and Foxconn to provide contract manufacturing services. At the same time, Geely Holdings Group also participated in a small amount of investment in the listing of Faraday Future SPAC.

On April 12, 2021, a two-year investigation finally came to fruition. Leeco was fined 240.6 million yuan for financial fraud, fraudulent issuance and other illegal acts, and its controller Jia Yueting was fined 241.2 million yuan, Leeco said in a notice. On April 13, 2021, the CSRC issued a decision on banning the market and decided to ban Jia Yueting from the securities market for life.

On July 23, 2021, Faraday Future officially listed on the NASDAQ Stock Exchange in the United States and held a bell-ringing ceremony to begin official public trading under the stock code "FFIE". Jia Yueting said that the future listing of Faraday means a new starting point, bringing an important capital flow to the company, and will go all out to achieve 12-month mass production and have great confidence in FF91's just-in-time production. When asked if he would return to China, Jia Yueting gave an accurate answer: "that's a must!"

However, at present, whether it is Faraday Future or Leeco 3, the performance in the secondary market is not satisfactory. Since September 6, 2021, Leeco 3 has staged 40 daily limits in more than 50 trading days, and its share price has shrunk by 76%. So far, Leeco 3 is quoted at 0.62 yuan, with a total market capitalization of 2.47 billion yuan. The same is true for Faraday in the future. FFIE's offering price was $13.78, up more than 40% to $17.0 before trading, but fell below the offering price at one point, and finally closed up 1.45% at $13.98, with a total market capitalization of $4.535 billion. Faraday's shares, which have fallen 62 per cent since its future listing, tumbled 8.85 per cent on Friday to close at $5.15, with a total market capitalization of $1.67 billion.

Similarly, the poor performance of FF in the secondary market is related to its situation. On October 7, US time, the US short seller J Capital Research released a short selling report on FF, expressing its doubts about FF from the perspectives of FF's production capacity, capital operation performance, R & D investment and Jia Yueting's own punishment in China. The sources included field research visits, company financial report data and public information, and questioned FFIE's car-building ability from various aspects. And listed a series of 10 items, including embezzlement, factory delays and fake orders, and said bluntly that "I don't think FF can sell a car." Later, Jia Yueting said in a post on Weibo that the short selling agency's remarks were hot speculation and nonsense, and that it was not the first time that J Capital Research had been slapped in the face.

However, the short sellers' reports set off a chain reaction because of inaccurate allegations from US short sellers, FF set up a special committee of independent directors to investigate allegations of inaccurate disclosures made by short sellers. FF will not be able to submit its financial statements until the end of the investigation, and FF received a letter from Nasdaq reminding that Faraday will need to submit the report within 60 natural days because it did not submit its third-quarter results on time.

It is worth mentioning that Faraday Future official blog said that Diane Sharp, the new mayor of Hanford, California, visited the FF Hanford factory, and Faraday's future FF 91 will be officially mass produced this summer. Of course, it is still unknown whether the mass production of FF 91 will be realized in 2022.

Leeco pinned its hopes on Jia Yueting, while Jia Yueting pinned his hopes on FF. However, Jia Yueting faces huge lawsuits at home, while FF is also financially questioned in the United States. As of press time, FF has yet to release its third-quarter 2021 results. According to the latest news from FF, Nasdaq has agreed to extend the deadline for submitting the report by 15 days, and to submit the compliance plan no later than February 1, 2022.

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