What’s new: China’s scandal-plagued drugmaker Kangmei Pharmaceutical Co. Ltd. (600518.SH) paid 2.46 billion yuan ($364 million) in compensation to investors, closing the country’s first securities class-action lawsuit against a fraudulent issuer.
More than 52,000 Kangmei investors received cash payments under the company’s reorganization plan, according to Li Chao, vice chairman of the China Securities Regulatory Commission (CSRC), at a briefing Friday.
Among the investors, 99.4% are small retail investors with losses of less than 500,000 yuan, Li said.
The background: Kangmei, one of China’s biggest publicly traded drugmakers, was accused of financial reporting fraud involving 88.6 billion yuan of overstatements between 2016 and 2018. Regulators found that the company used fake bank deposit slips to inflate cash reserves, forged documents for nonexistent business activities and transferred company funds to related parties to trade in its own stock.
In November 2021, a court in Guangzhou made a landmark ruling in the country’s first securities class-action lawsuit, ordering Kangmei to pay 2.46 billion yuan to more than 50,000 shareholders who lost money because of the fraud.
In January, Ma Xingtian, the former chairman of Kangmei, was sentenced to 12 years in prison and fined 1.2 million yuan for manipulating the securities market, failure to disclose important information and bribery.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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