SHANGHAI (Reuters) – A Chinese court ruled on Friday against Kangmei Pharmaceutical Co and some of its former executives, handing victory to investors in China’s first class-action lawsuit against corporate fraud.
The ruling by the Intermediate People’s Court of Guangzhou was hailed by China’s securities regulator as a “milestone” event in the country’s capital markets.
Under the ruling, Kangmei must pay 55,326 investors a total of 2.46 billion yuan ($385.51 million) to reimburse their losses. Former Chairman Ma Xingtian and his wife, as well as four former executives, are liable for the obligations.
Kangmei was engaged in intentional and systematic financial cheating worth 30 billion yuan ($4.60 billion) between 2016 and 2018, the China Securities Regulatory Commission (CSRC) has concluded.
CSRC said in a statement that the costly penalty against the executives holds the “top evils” responsible, and will help intimidate capital-market wrong-doers.
Kangmei could not immediately be reached for comment on the ruling.
China, which vows “zero tolerance” against accounting fraud, launched the country’s first class-action lawsuit https://www.reuters.com/article/china-markets-classaction-idUSL4N2M93GB against Kangmei last April.
CSRC said that in addition to Friday’s ruling, the Foshan Procuratorate is launching criminal charges against former Kangmei Chairman Ma.
($1 = 6.3812 Chinese yuan renminbi)
(Reporting by Shanghai Newsroom, Editing by Timothy Heritage)
