Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—China-based online retailer overstated net revenue, (Sep 14, 2026)

By R. Jason Howard, J.D.

The company did not have adequate internal accounting controls or policies and procedures.

The SEC has accepted an offer of settlement from Dada Nexus Limited, a Cayman Islands corporation headquartered in Shanghai, China, that operates a local on-demand retail and delivery platform in China, after determining that Dada engaged in sham transactions concerning certain online advertising and marketing transactions that lacked any apparent business substance and were conducted primarily to meet revenue targets (In the Matter of Dada Nexus Ltd., Exchange Act Release No. 34-106344 (Sept. 11, 2026)).

Transactions. According to the SEC’s order, from October 2022 through September 2023, Certain Dada employees engaged in the sham transactions, which “involved payments from certain upstream customers and disbursements of cash funds to certain downstream vendors of virtually identical amounts that lacked any apparent business substance, were not supported by credible documents, business records or other evidence, and in certain cases, involved customers and vendors with undisclosed connections.”

Those sham transactions resulted in Dada materially overstating net revenues and operation and support costs of approximately $80 million on Form 6-K for the fourth quarter of fiscal year 2022 and approximately $81 million for the first three quarters of fiscal year 2023.

In November 2023, an internal audit identified the transactions which were conducted by Dada’s online advertising and marketing services business units. On January 8, 2024, Dada disclosed the discovery of the transactions on Form 6-K. On March 5, 2024, another Form 6-K from Dada disclosed that the transactions “lacked any apparent business substance” and were “conducted primarily to meet revenue targets.”

The SEC found that Dada did not have “adequate internal accounting controls or policies and procedures to provide reasonable assurance that revenues and expenses from transactions were accurately recorded and reported in its financial statements in accordance with U.S. Generally Accepted Accounting Principles.”

In determining to accept the settlement offer, the SEC considered the remedial steps taken and completed by Dada, “including its self-identification of the Transactions, independent review and subsequent remediation, and cooperation with the Commission.”

Penalties. For its violations, Dada was ordered to cease and desist from future violations and pay a civil monetary penalty of $500,000.

The release is No. 34-106344.

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