UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 99483 / February 6, 2024

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4487 / February 6, 2024

ADMINISTRATIVE PROCEEDING

File No. 3-21844

In the Matter of

Cloopen Group Holding 

Limited,

Respondent.

ORDER INSTITUTING CEASE-ANDDESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASEAND-DESIST ORDER

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate that ceaseand-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities

Exchange Act of 1934 (“Exchange Act”), against Cloopen Group Holding Limited (“Cloopen” or 

“Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings

herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Ceaseand-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
2

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1that: 

Summary

1. These proceedings arise from an accounting fraud perpetrated by the former 

Operating Management Director and a former Department Head at Cloopen (the “Senior 

Managers”). During Cloopen’s year-end audit for fiscal year 2021, its external auditor (the 

“External Auditor”) identified potential accounting errors. Following an internal investigation, 

Cloopen determined that, from May 2021 through February 2022, the two China-based Senior 

Managers, who headed the department that handled Cloopen’s strategic customers, had orchestrated 

a fraudulent scheme to prematurely recognize revenue on service contracts for which Cloopen had 

either not completed work or, in some instances, not even started work. Cloopen also identified 

additional problematic contracts in other departments that were missing or appeared to have 

falsified supporting documentation. 

2. As a result of this misconduct, Cloopen overstated the unaudited financial results 

that it announced in its filings with the Commission for the second and third quarters of 2021. 

Specifically, Cloopen’s revenue for the second quarter of 2021 was overstated by $1.8 million

(RMB 11.6 million) (approximately 4% of its total revenue) and its revenue for the third quarter 

was overstated by $2.8 million (RMB 17.8 million) (approximately 6% of its total revenue).2 In 

addition, Cloopen’s announced revenue guidance for the fourth quarter of 2021 was significantly

overstated. When Cloopen announced the investigation into potential accounting errors, the price of 

its American depositary shares declined 12.7% from the prior day’s closing price.

3. As described in further detail below, Cloopen’s conduct violated Sections 10(b), 

13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 10b-5, 12b-20, 

13a-1, and 13a-16.

Respondent

4. Cloopen is a Cayman Islands corporation that is headquartered in Beijing, People’s 

Republic of China (“China”) and operates in China through its variable interest entity, Beijing 

Ronglian Yitong Information Technology Co. Ltd. Cloopen’s American depositary shares

(“ADSs”) were registered with the Commission pursuant to Section 12(b) of the Exchange Act and 

traded on the New York Stock Exchange (“NYSE”) under the symbol “RAAS.” On October 25, 

2023, the NYSE filed with the Commission a Form 25 notification of removal of Cloopen’s ADSs 

from listing and registration as of November 6, 2023 based on Cloopen’s failure to file its annual 

reports for the years ended December 31, 2021 and December 31, 2022, and a current report on 

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding.

2 References to U.S. dollars throughout this Order reflect approximate conversions from Chinese 

renminbi (RMB) using the exchange rate from the relevant quarter.
3

Form 6-K for the half year ended June 30, 2022. As of November 6, 2023, Cloopen’s ADSs are 

registered under Section 12(g) of the Exchange Act and are quoted on the over-the-counter market. 

Cloopen files periodic reports with the Commission pursuant to Section 13(a) of the Exchange Act 

and related rules thereunder applicable to foreign private issuers.

Facts

5. Cloopen is a provider of cloud-based communications products and services to 

enterprises of various sizes located primarily in China. Cloopen does not operate in the United 

States and has no employees based in the United States. However, because Cloopen has American 

depositary shares that traded on the NYSE, it was required to file periodic reports with the 

Commission, including announcements of its unaudited quarterly results on Form 6-K and annual 

reports on Form 20-F. 

6. In early 2022, in preparation for Cloopen’s annual report for fiscal year 2021, the 

External Auditor commenced an audit of the company’s financial statements. During that audit, the 

External Auditor identified irregularities relating to certain customer transactions. On April 29, 

2022, the External Auditor resigned.

7. On May 3, 2022, Cloopen announced that it was conducting an internal 

investigation concerning the issues identified by the External Auditor.

8. During that internal investigation, Cloopen discovered the fraudulent scheme 

orchestrated by the Senior Managers to improperly recognize revenue early on customer contracts 

that had not been fulfilled as well as certain other accounting errors. The Senior Managers’ scheme

began in May 2021, a few months after Cloopen’s American depositary shares began trading for the 

first time on the NYSE in February 2021. Shortly before its listing, Cloopen formed a new 

department to manage strategic customer contracts and key accounts, and tapped the Senior 

Managers to lead the department. Around the same time, Cloopen also implemented a new 

performance evaluation system that set strict quarterly sales goals and imposed penalties, including 

salary and bonus reductions, on executives, including the Senior Managers, whose departments fell 

short of those targets. 

9. Facing pressure to meet the quarterly sales goals, the Senior Managers engaged in a 

scheme to fraudulently recognize revenue on contracts where services had not been completed or, in 

some cases, had not been started. Between May 2021 and February 2022, the Senior Managers 

directed their employees to prematurely recognize revenue on approximately 25 contracts out of a 

total of 43 contracts in their department. To support this early revenue recognition, the Senior 

Managers solicited and received customer acceptance reports, which purported to confirm work had

been completed, prior to the relevant projects’ actual completion and sometimes even before the 

contracts had been signed. 

10. In addition to the scheme orchestrated by the Senior Managers in the department 

they led, Cloopen’s investigation also identified transactions in other departments that resulted in 

improperly recognized revenue, by, among other things, the use of acceptance reports prior to 

completion of work and the falsification or lack of supporting documentation. These errors 

contributed to the overstating of Cloopen’s revenues.
4

11. Throughout the relevant period, Cloopen did not have adequate internal accounting 

controls and company policies and procedures in place to provide reasonable assurance that 

revenues from sales transactions were accurately recorded and reported in its financial statements in 

accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

12. On September 6, 2022, Cloopen announced the substantial completion of its 

internal investigation and disclosed that it had misstated reported revenue in its unaudited financial 

statements for the second and third quarters of fiscal year 2021 as well as in its guidance for the 

fourth quarter of the same fiscal year. Specifically, Cloopen’s reported revenue of $42.4 million

(RMB 273.9 million) for the second quarter of 2021 was overstated by $1.8 million (RMB 11.6 

million). Cloopen’s reported revenue of $42.9 million (RMB 276.1 million) for the third quarter of 

2021 was overstated by $2.8 million (RMB 17.8 million). 

13. Cloopen’s internal investigation also concluded that the company had prematurely 

recognized millions of dollars in revenue in the fourth quarter of 2021 as a result of the Senior 

Managers’ scheme. As a result, Cloopen announced that it would fall significantly below the

revenue guidance for the fourth quarter of fiscal year 2021 that it had previously announced in 

November 2021. The inaccurate internal fourth quarter figures were discovered before Cloopen 

reported its financial results for the fourth quarter of 2021. 

Violations

14. As a result of the conduct described above, Cloopen violated Section 10(b) of the 

Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with the 

purchase or sale of securities. 

15. As a result of the conduct described above, Cloopen violated Section 13(a) of the 

Exchange Act and Rules 12b-20, 13a-1, and 13a-16 thereunder, which require every foreign issuer 

of a security registered pursuant to Section 12 of the Exchange Act to furnish the Commission with 

periodic reports containing information that is accurate and not misleading.

16. As a result of the conduct described above, Cloopen violated Sections 13(b)(2)(A) 

and 13(b)(2)(B) of the Exchange Act. Section 13(b)(2)(A) of the Exchange Act requires issuers 

with a security registered pursuant to Section 12 of the Exchange Act to make and keep books, 

records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions and 

dispositions of the assets of the issuer. Section 13(b)(2)(B) of the Exchange Act requires such 

issuers to, among other things, devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that transactions are recorded as necessary to permit 

preparation of financial statements in accordance with generally accepted accounting principles.
5

Cloopen’s Cooperation and Remedial Efforts

17. In determining to accept the Offer, the Commission considered Cloopen’s prompt

self-report of accounting errors to the Commission’s staff, the cooperation provided by Cloopen 

throughout the Commission’s investigation, and the remedial measures undertaken by Cloopen.

18. In early May 2022, Cloopen self-reported to the Commission’s staff the accounting 

errors uncovered by the External Auditor. Cloopen made the self-report within a few days of 

retaining outside counsel to conduct an internal investigation and before any significant steps had 

been taken as part of that investigation.

19. Thereafter, Cloopen provided substantial cooperation to the Commission’s staff 

throughout the staff’s investigation, including by providing detailed explanations of the customer 

transactions at issue and their financial impact; summarizing interviews of witnesses located in 

China; identifying, translating, and producing certain key documents originally written in Chinese; 

and providing other relevant information to the staff. The cooperation afforded by Cloopen 

substantially advanced the efficiency of the staff’s investigation and conserved Commission 

resources.

20. Cloopen also undertook prompt remedial measures, including: (1) forming an 

independent special committee of its Board of Directors to investigate the issues raised by the 

External Auditor; (2) terminating the Senior Managers who orchestrated the early revenue 

recognition misconduct and also disciplining other employees who were involved; (3) reorganizing 

or removing the departments involved in the misconduct; (4) strengthening its internal accounting 

controls surrounding customer contracts, payments, and revenue recognition; (5) retraining 

company executives, department heads, and employees in the finance, accounting, internal audit, 

and sales departments on Cloopen’s internal accounting controls and company policies and 

procedures, including with respect to revenue recognition; (6) recruiting finance and accounting 

personnel with expertise in U.S. GAAP; and (7) clawing back $228,000 (RMB 1.64 million) of 

bonus compensation paid to Cloopen’s Chief Executive Officer and Chief Financial Officer for the 

last nine months of 2021.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent Cloopen’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Cloopen cease and desist 

from committing or causing any violations and any future violations of Sections 10(b), 13(a), 

13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 10b-5, 12b-20, 13a-1,

and 13a-16. 
6

B. Respondent acknowledges that the Commission is not imposing a civil penalty based upon 

its cooperation in a Commission investigation. If at any time following the entry of the Order, the 

Division of Enforcement (“Division”) obtains information indicating that Respondent knowingly 

provided materially false or misleading information or materials to the Commission, or in a related 

proceeding, the Division may, at its sole discretion and with prior notice to the Respondent, 

petition the Commission to reopen this matter and seek an order directing that the Respondent pay 

a civil money penalty. Respondent may contest by way of defense in any resulting administrative 

proceeding whether it knowingly provided materially false or misleading information, but may not: 

(1) contest the findings in the Order; or (2) assert any defense to liability or remedy, including, but 

not limited to, any statute of limitations defense.

By the Commission.

Vanessa A. Countryman

Secretary