One quarter shows how far the reported number moved

For the third quarter of 2023, Dada reported RMB 2.867 billion in net revenue. The corrected figure was RMB 2.622 billion. The RMB 245 million difference represented a 9.34% overstatement relative to corrected revenue, according to the SEC order.

That difference mattered for more than presentation. The SEC found that the transactions put reported revenue inside guidance. Without them, third-quarter revenue would have fallen approximately 6% below Dada’s range. In the preceding quarter, the miss would have been approximately 7%.

How the transactions turned cash movement into reported growth

Dada operated an on-demand retail and delivery platform in China. The transactions occurred in business units that helped customers promote bank-card use on Dada’s platform and place advertisements on third-party media platforms.

The SEC described a circular-looking commercial structure. Dada entered sales contracts with customers and corresponding purchase contracts with vendors. The amounts were approximately equal, yet no services were provided under the relevant contracts.

1. Step 1Dada entered a sales contract with a customer.
2. Step 2The customer paid funds to Dada.
3. Step 3Dada entered a corresponding purchase contract with a vendor.
4. Step 4Virtually the same amount moved to the vendor, with no services provided under the relevant contracts.
5. Step 5Dada recorded both revenue and operations and support costs, helping reported revenue meet guidance.

At least some customers and vendors had undisclosed connections and earned commissions related to the contracts, the order states. Credible documents, business records, or other evidence did not support the transactions.

The SEC attributed the execution of the transactions to junior Dada employees. Those employees could have benefited financially from meeting revenue targets if they also satisfied other bonus requirements. The order does not say they necessarily received those bonuses.

The overstatement accelerated in 2023

The largest corrections came in the second and third quarters of 2023. Together, those two quarters accounted for RMB 459 million of the RMB 568 million revenue correction shown in the SEC’s quarterly table.

Percentages are those reported by the SEC and are measured against corrected revenue or corrected operations and support costs. Guidance shortfalls are the SEC’s approximate calculations.

The reporting failure was also a controls failure

The SEC found that Dada lacked adequate internal accounting controls and procedures to provide reasonable assurance that revenue and expenses were recorded accurately under U.S. generally accepted accounting principles.

Dada later disclosed a material weakness in internal control over financial reporting. The weakness affected the online advertising and marketing units that had expanded during 2023. The identified deficiencies included insufficient ongoing risk assessment and management monitoring, ineffective expenditure controls, and inadequate separation of duties in vendor management.

An internal audit found what quarterly reporting had missed

1. October 2022 to September 2023The relevant business units carried out the transactions, and Dada recognized the associated revenue and costs.
2. November 2023A routine internal audit identified the transactions. Dada’s audit committee led an independent review.
3. January 8, 2024Dada disclosed an initial estimate of approximately RMB 500 million in overstated revenue and costs for the first three quarters of 2023. It withdrew reliance on previously issued fourth-quarter and full-year guidance. Its ADS price then fell 43%.
4. March 5, 2024Dada disclosed that its independent review found the transactions lacked apparent business substance and were conducted primarily to meet revenue targets.
5. June 16, 2025Dada went private and its shares ceased being publicly traded. The company remained a legal entity.
6. September 11, 2026The SEC entered its settled cease-and-desist order and imposed a $500,000 civil penalty.

What investors were told, and what the order does not measure

Dada’s American depositary shares traded on Nasdaq during the relevant period, even though the company did not operate in the United States or employ workers there. That listing subjected Dada to U.S. periodic reporting requirements.

Investors received unaudited results that materially overstated both revenue and costs. The revenue figures also made the company appear to have achieved guidance that it would otherwise have missed. When Dada first disclosed the issue, the ADS price fell 43% after the announcement.

The order does not calculate investor losses, identify specific harmed shareholders, or establish how much of that market decline was attributable to each disclosed fact. It also does not identify a corporate profit equal to the overstated revenue. The RMB figures measure accounting overstatement, not demonstrated economic gain.

Dada investigated, remediated, and settled

Dada said it terminated, requested the resignation of, or demoted employees found to have engaged in misconduct or failed to meet company expectations. It terminated contracts with implicated suppliers and customers, enhanced policies and controls, improved record-keeping, and conducted additional employee training.

The SEC credited Dada’s self-identification of the transactions, independent review, remediation, and cooperation. The company voluntarily reported its review findings to SEC staff and provided written narratives supported by relevant documents.

The settled order found that Dada violated federal reporting, books-and-records, and internal accounting control provisions. Dada agreed to cease and desist from current and future violations and to pay $500,000 to the U.S. Treasury within 10 business days.

Dada did not admit the findings, apart from the SEC’s jurisdiction. The order does not direct compensation to investors. It also states that the SEC did not impose a penalty exceeding $500,000 based, among other things, on Dada’s cooperation.