A class action lawsuit has been filed in the United States District Court, Southern District of New York, on behalf of all persons who purchased American Depository Shares ("ADS") of China Medical Technologies, Inc., between November 26, 2007 and December 12, 2011, inclusive (the "Class Period"). This class action is brought under the Securities Exchange Act of 1934 and Rule 10b-5 against the Company and certain of its top officials.
The Complaint alleges that throughout the Class Period, defendants made false and/or misleading statements and or failed to disclose that: (1) the Company's acquisition of Beijing Bio-Ekon Biotechnology Co. Ltd. ("BBE") was from a third party seller connected to China Medical's Chairman, Wu Xiaodong; (2) the Company overpaid approximately $20 million to acquire BBE; (3) the Company's acquisition of BBE involved the use of fraudulent shell companies; (4) BBE was suffering operating losses prior to the acquisition; (5) the Company overstated accounts receivables in order to inflate sales and net income; (6) the Company's reported profit margins were inflated; and (7) as a result of the foregoing, the Company's statements were materially false and misleading at all relevant times.
On December 6, 2011, Glaucus Research Group published an analyst report revealing, in part, that China Medical's Chief Executive Officer was embezzling money through sham acquisitions, the Company's reported profits and net income were inflated as they were inconsistent with comparable competitors, and the majority of the Company's account receivables were in excess of 120 days, indicating that its reported revenues were inflated. On this news, China Medical's shares declined $0.81 per share, or nearly 24%, to close on December 6, 2011 at $2.57 per share, on unusually heavy trading volume.
On December 13, 2011, China Medical disclosed that the Company intends to implement a debt restructuring plan to improve its balance sheet. On this news, China Medical's shares declined $0.43 per share, or nearly 13%, to close on December 13, 2011 at $2.87 per share, on unusually heavy trading volume.
If you are a current shareholder and/or purchased during the class period of ovember 26, 2007 and December 12, 2011 inclusive and would like to discuss your options of exercising your rights as a shareholder, please contact us.
Please submit the following information so we can determine if you qualify for the suit. If you don't know all the specific details, partial information is also acceptable.