Chatting About Stocks: Listed Companies "Following Trends" Hurts Others and Doesn't Help Themselves

China United Network Communications Limited and Yahui Long were both fined for riding the hot topic of brain-machine interfaces, once again sounding the alarm for listed companies about compliance and disclosure. The purpose of “riding the trend” for listed companies is nothing more than to boost stock prices and market value. However, under strict regulatory oversight, “riding the trend” has become a key illegal and violations behavior that regulators are cracking down on. Once a company is investigated, its stock price faces pressure, and investors may suffer losses—behaviors that harm others without benefiting oneself.

“Riding the trend” refers to some listed companies exploiting popular market concepts, exaggerating business connections, and obscuring risk warnings in their disclosures to attract funds and inflate stock prices. Their motivation is not based on genuine operations or long-term value but on short-term stock price increases. This behavior directly violates the fundamental principles of truthful, accurate, complete, and timely information disclosure, undermining the fairness and credibility of the capital market.

In the current environment of strict regulation, “riding the trend” is no longer a blind spot but a focus of regulatory enforcement. Authorities maintain a high-pressure stance against misleading statements, false disclosures, and selective information disclosure. If a company is subject to regulatory measures or investigation for “riding the trend,” it will face administrative penalties and reputational damage. The more immediate consequence is downward pressure on stock prices. Investors misled into buying may suffer losses, and the company’s market value may not only fail to sustain but also experience greater volatility.

From the perspective of the company’s own development, “riding the trend” is also counterproductive. The value of a listed company ultimately depends on its core business competitiveness, R&D investment, profitability, and sustainable operations. Focusing on concepts and hype weakens attention to the main business, neglects internal governance and risk control. Short-term stock price increases cannot translate into long-term competitiveness and may cause the company to lose the trust of professional investors and long-term capital, negatively impacting future financing, business cooperation, and market reputation.

Moreover, if a listed company is investigated and penalized by the China Securities Regulatory Commission (CSRC), it may also face investor claims. According to lawyer Xu Feng, director of Shanghai Jiucheng Law Firm, investors should have the qualification and opportunity to claim compensation from Yahui Long. Specifically, investors who bought Yahui Long shares between January 7, 2026, and February 7, 2026, and sold or continued holding after February 7, are now eligible to initiate claims.

It is especially important to note that “riding the trend” can induce some investors to chase short-term themes and ignore the company’s fundamentals, exacerbating market irrational fluctuations. When the hype subsides and the truth emerges, most of the damage is borne by ordinary investors. A listed company’s illegal “riding the trend” damages the interests of a group of investors and erodes the trust foundation of the entire market.

For listed companies, compliance is the bottom line, and value is the right path. The core of market value management is to enhance intrinsic value, not to manipulate market expectations. Directors, supervisors, and senior management should be diligent and responsible, eliminate complacency, avoid releasing hype-related information without substantive business support, and refrain from selective disclosures that could easily mislead the market. They should truly be responsible to the market, investors, and the company’s long-term development.

Regulatory authorities’ high-pressure enforcement can create a sustained deterrent against “riding the trend.” Only by making the cost of violations significantly higher than the benefits can the impulse for listed companies to “ride the trend” be fundamentally curbed.