A Research On LDD’s IPO Fraud

China’s securities market has made tremendous achievements since its establishmentin more than20years, and has affected China’s real economy to a larger degree.However, due to the asymmetric information, externality and other reasons, violations ofsecurities market in our country are common to be seen. The reason that the listingCorporation often manipulate earnings through various means and gloss over its financialsituation, thus misleading investors, has rooted in their behavior characteristics andunderlying causes. Those fraud behaviors will seriously affect the development of listedcorporations. What is worse is that it will violate the interests of investors. Currently, theact of securities regulatory departments has drawn much more attention from all walks oflife especially.In this paper we selects a famous company that has been exposed a serious securitydefraud in recent years as a case to analyze. A brief introduction will be given for itsbackground and main cause. Discussion will be given for its impact on public opinionthrough revealing the use of corrupt practices, based on which analysis will be conducton problems exposed. Since the fake tactics and behavior characteristics in this case isvery representative, namely manipulation of profit through frequent transaction withassociate companies so as to make the major data in its financial statements conform therelevant listing standards, and then list as wishes. This case also largely reflects thecharacteristics of listing corporation fraud behavior in Chinese stock market.This paper describes some representative techniques which are used frequently inrecent years. And then methods and effective applications are suggested for financialfraud identification. Based on case analysis, this paper attempts to explore thedeep-seated causes that China’s securities market regulators, especially the IEC tend toignore the financial fraud actions that involve corporate governance, institutional factors,information disclosure and other issues. At last, the paper gives some suggestions tostrengthen the securities supervision.