Kangmei Pharmaceutical Co., Ltd. controversies

Former Chairman Ma Xingtian Sentenced to 12 Years in First Instance for Securities Market Manipulation and Bribery

In 2021, a court found Kangmei's former chairman Ma Xingtian guilty of securities market manipulation, failure to disclose important information as required, and corporate bribery, among other offenses, and sentenced him to 12 years after combining the penalties. This entry supplements the criminal outcome of the financial fraud exposed in 2019; criminal liability is limited to the parties named in the judgment.

First Securities Special Representative Action Awards About RMB 2.459 Billion in Damages to Investors

In 2021, the first-instance ruling in the special representative action over Kangmei Pharmaceutical's false statements awarded about RMB 2.459 billion in damages to more than 50,000 investors, with relevant executives and the auditing firm bearing joint liability to varying extents. This entry concerns the investor class action and liability for damages; it does not mean the full amount has been paid out.

CSRC imposes securities-market bans on Kangmei Pharmaceutical case principals

Ban or restriction

In its decision in the Kangmei Pharmaceutical violations case, the China Securities Regulatory Commission (CSRC) imposed securities-market bans ranging from 10 years to lifetime on six principal responsible persons. The CSRC also stated that it had transferred suspected criminal conduct by the company and related persons to judicial authorities. The decision addressed the principals identified in the case and set out the market-entry restrictions applied to them, alongside the referral of suspected criminal matters for judicial handling.

As part of its decision in the Kangmei Pharmaceutical violations case, the CSRC imposed securities-market bans of between 10 years and lifetime on six principal responsible persons. The CSRC also said it had transferred suspected criminal conduct by the company and related persons to judicial authorities.

Regulator Penalizes Kangmei Pharmaceutical for Financial Fraud

Fine or penalty

China's securities regulator issued an administrative penalty and a market-entry ban decision against Kangmei Pharmaceutical, ordering the company to rectify its conduct, issuing a warning, and imposing a fine of 600,000 yuan. The regulator determined that Kangmei Pharmaceutical had inflated revenue and cash, among other financial-reporting misconduct, during the period from 2016 to 2018. The action was announced in May 2020.

China's securities regulator imposed an administrative penalty and market-entry ban decision on Kangmei Pharmaceutical, ordering it to rectify its conduct, issuing a warning, and fining it 600,000 yuan. The regulator determined that Kangmei Pharmaceutical had inflated revenue and cash, among other financial-reporting misconduct, from 2016 to 2018.

Kangmei financial-reporting fraud

Kangmei admitted that earlier financial reports contained major false statements, including inflated cash holdings, revenue, and profits. The CSRC later characterized the conduct as deliberate and imposed penalties on the company and individuals. The scandal led to trading restrictions, index removal, investor litigation, criminal proceedings, and substantial compensation claims.