Two Companies Fined for Capitalizing on "Brain-Computer Interface" Hype

On March 17, the Shenzhen Securities Regulatory Bureau issued administrative penalty decisions and prior notice of administrative penalties, determining that Yahui Long (688575) and Yingji Xin (688209) previously disclosed information related to “brain-computer interfaces” that was inaccurate and incomplete, which led or could have led investors to make incorrect judgments. After the relevant disclosures, the company’s stock price significantly deviated from market trends and experienced abnormal fluctuations, suspected of violating relevant regulations and constituting misleading statements.

Constituting Misleading Statements

Yahui Long is proposed to be fined 4 million yuan

The “Administrative Penalty Decision” states that on January 6, Yahui Long signed a “Strategic Cooperation Framework Agreement” with Brain Machine Starlink. That evening, Yahui Long issued an announcement titled “Voluntary Disclosure of Signing the Strategic Cooperation Framework Agreement,” which disclosed that Brain Machine Starlink’s technical route and product information included “deeply cultivating non-invasive and invasive dual technical paths” and that “products such as EEG acquisition analyzers, brain-computer interface sleep aids, sleep monitoring devices, and vagus nerve stimulators have been developed.”

According to investigations, currently, Brain Machine Starlink’s technical route is non-invasive, with only a prototype of the vagus nerve stimulator, which is still in the registration preparation stage for a Class II medical device; the other products are still in development with no prototypes.

In comparison, the related information disclosed in Yahui Long’s announcement failed to accurately and completely reflect Brain Machine Starlink’s actual technical route and product status.

That evening, Yahui Long issued a supplementary announcement titled “Supplementary Disclosure of Signing the Strategic Cooperation Framework Agreement,” stating that the main developed products include EEG analyzers, brain-computer interface sleep aids, sleep monitoring devices, and vagus nerve stimulators, and that these products have not yet entered the registration application stage.

Investigations show that currently, Brain Machine Starlink’s EEG analyzers have no prototypes or models, only some components in early testing; the design of the sleep aid and sleep monitoring devices depends on EEG analyzers that are not yet completed, representing long-term plans.

Compared to the original announcement, the supplementary disclosure did not fully disclose the actual development stages of the EEG analyzers, sleep aids, and sleep monitoring devices.

On January 7, Yahui Long issued a reply announcement regarding inquiries from the Shanghai Stock Exchange (referred to as “Reply Announcement”), stating that the development stages of EEG analyzers, sleep aids, and sleep monitoring devices are still not in the registration application stage. The reply also mentioned that Brain Machine Starlink “has market sales capacity in non-serious medical products and currently has orders.”

However, the Reply Announcement did not fully disclose the actual development stages of these products. Additionally, the non-serious medical products involved currently have no actual orders, only framework cooperation agreements, and the statements did not accurately reflect the actual situation of Brain Machine Starlink’s non-serious medical products.

Based on this, regulatory authorities concluded that the above disclosures by Yahui Long were inaccurate and incomplete, which could have led investors to make incorrect judgments. After the disclosures, the company’s stock price deviated significantly from market trends and experienced abnormal fluctuations, violating relevant regulations and constituting illegal misleading statements. Hu Kunhui, as chairman of Yahui Long, is directly responsible for the illegal disclosure of this information. Wang Mingyang, as the company’s secretary of the board, is also directly responsible.

The Shenzhen Securities Regulatory Bureau intends to decide to order Yahui Long to correct the situation, issue a warning, and impose a fine of 4 million yuan; Hu Kunhui and Wang Mingyang will each receive warnings and fines of 2 million yuan and 1.5 million yuan, respectively.

On the same day, Yahui Long also announced that Wang Mingyang applied to resign as secretary of the board of directors due to personal reasons. After resignation, he will continue to hold other positions in the company. Until a new secretary is appointed, Hu Kunhui will temporarily perform the duties of the secretary of the board.

Publishing Misleading Statements on Interactive Platforms

Yingji Xin is proposed to be fined 4 million yuan

The “Prior Notice of Administrative Penalty” shows that on January 5, Yingji Xin planned to post a Q&A on the SSE e-Interaction platform titled “Company’s progress and future plans on core chips for EEG signal collection,” and responded the next day after market close, stating that “the company has entered the brain-computer interface chip field through early investment layout. The IPA1299 launched by the company is an 8-channel, low-noise 24-bit ADC chip, dedicated to high-precision measurement of biological electrical signals, applicable to EEG signal collection and other brain-computer interface scenarios. The IPA1299 chip has been mass-produced and shipped, with performance parameters comparable to leading overseas chips.”

Investigations found that the company’s reply claimed “entry into the brain-computer interface chip field,” and stated that “the company’s IPA1299” “performance parameters comparable to overseas top chips” and that “IPA1299 has been mass-produced and shipped,” but the company’s brain-computer interface products’ technical route is non-invasive, which differs significantly from the invasive dominant technology abroad. Moreover, the “IPA1299” chip is jointly developed by Yingji Xin and its affiliated company Jingxin Weier (Changzhou) Electronic Technology Co., Ltd., currently in the market cultivation stage, without large-scale sales or revenue, which contradicts the description of “mass production and shipment” in the reply. On the morning of January 7, the company issued a clarification announcement regarding the above issues.

The Shenzhen Securities Regulatory Bureau believes that the relevant information disclosed by Yingji Xin on the interactive platform on January 6 was inaccurate and incomplete, which could have led investors to make incorrect judgments. After the disclosure, market attention increased, the company’s stock price deviated significantly from market trends, and abnormal fluctuations occurred, suspected of violating relevant regulations and constituting illegal misleading statements.

Chen Xin, as director and CEO of Yingji Xin, recommended, decided, and participated in the misleading disclosures above; Huang Hongwei, as chairman and general manager, bears management responsibility for the company’s information disclosure and did not verify the information before the misleading disclosure; Wu Renchao, as secretary of the board, reviewed and participated in the misleading disclosures. Chen Xin, Huang Hongwei, and Wu Renchao failed to perform their duties diligently, did not ensure the truthfulness, accuracy, and completeness of the company’s disclosures, and are directly responsible for the illegal disclosure.

The Shenzhen Securities Regulatory Bureau plans to decide to warn Yingji Xin and impose a fine of 4 million yuan. Chen Xin, Huang Hongwei, and Wu Renchao will each be fined 2.1 million yuan, 1.1 million yuan, and 800,000 yuan, respectively.

Yingji Xin stated that the company’s operations and business activities are proceeding normally. The company sincerely apologizes to investors and asks for their understanding. The company will learn from the lessons, strengthen internal governance, improve the quality of information disclosure, strictly comply with relevant laws and regulations, and fulfill its obligation to disclose information truthfully, accurately, completely, timely, and fairly to protect the interests of the company and investors.

(Source: Shanghai Securities News)