CHANGSHA, Dec. 30 (Xinhua) — A Chinese-listed firm was convicted of securities fraud by a court in central China’s Hunan Province for forging sales figures in its initial public offering (IPO) prospectus.

The Intermediate People’s Court of Changsha City imposed a penalty of 8.5 million yuan (1.36 million U.S. dollars) on Hunan-based Wanfu Biotechnology Agricultural Development Co., over IPO fraud, the company’s statement said, quoting the court’s verdict .

Former chairman of the company Gong Yongfu was sentenced to three years and six months in jail and fined 100,000 yuan for IPO fraud and information disclosure violations.

Wanfu Biotechnology was found to have inflated its revenues and net profits from 2008 to 2011 in order to qualify for an IPO, said the verdict.

It concealed important financial facts and forged sales figures in IPO application materials and prospectus. As a result, it was listed on the Shenzhen bourse in 2011.

This case exposed loopholes in enterprise management, IPO examination and issuance mechanism, and delisting rules in China, said Central South University economics professor Wen Fenghua.