China Medical Technologies
Symbol:
CMED
Class Period:
11/26/2007 - 12/12/2011
Status:
Active
Documents:
On April 2, 2012, Pomerantz was appointed Lead Counsel in the securities class action lawsuit against China Medical Technologies ("China Medical" or the "Company").
Pomerantz filed a federal securities class action (11 Civ 9297) in United States District Court, Southern District of New York, on behalf of all persons who purchased American Depository Shares (“ADS”) of China Medical 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.
