Baidu Has ‘Zero Tolerance for Fraud,’ Says CEO of SEC's iQiyi Probe

IQiyi said it’s cooperating with the SEC Enforcement Division as it seeks financial records dating to January 2018, after short-seller firm Wolfpack Research alleged April 7 the company, known as the Netflix of China, was “committing fraud well before” its initial public offering two years ago. IQiyi hired “professional advisers to conduct an internal review” into the allegations, it said Thursday. IQiyi parent Baidu has “zero tolerance for fraud,” said CEO Robin Li on a quarterly call. “When there is a short-seller for an issue against our subsidiary, especially one that's quite autonomous, it is important to get an independent opinion.” This “is part of good corporate governance, and we think this validation process is important to earn investors' trust,” he said. Li isn't involved in the review, he said: “With COVID-19 in the backdrop, one should expect this process to be longer than normal. In past cases without a pandemic, we have seen investigations lasting months and sometimes beyond a year.” IQiyi shares closed 11.2% lower Friday at $19.26. Baidu was down 6.3% at $116.74.