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Dec 6, 2011

Securities Fraud Investigation Against China Medical Technologies by U.S. Law Firm

Faruqi & Faruqui, one of the leading U.S. litigation law firms, has begun to investigate potential U.S. securities fraud violations by China Medical Technologies. China Med is one of the leading in-vitro diagnostic companies in the world. It seems like a few of our clients have purchased from this company and, also, may have been enticed to invest in the company. This post has, also, been sent to clients that we think may have an interest in this litigation.

The following is from a Press Release by the law firm.
Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential securities fraud at China Medical Technologies ("China Med" or the "Company")

The investigation focuses on whether the Company and its executives violated federal securities laws by failing to disclose that: (1) China Med's acquisition of Bio-Ekon Biotechnology Co. Ltd. ("BBE") was from a third-party seller connected to the Company's own chairman; (2) China Med overpaid by an estimated $20 million in the acquisition of BBE; (3) China Med's transaction to acquire BBE involved the Company's use of fraudulent shell companies, including Finnea International Limited ("Finnea") which never owned BBE; (4) according to SAIC filings, BBE actually suffered operating losses prior to China Med's acquisition; and (5) the Company has spent twice as much on "investing activities" as it has purportedly generated from operations.

On December 6, 2011, Glaucus Research Group ("Glaucus") released a report focusing on the Company's fraudulent acquisition of BBE and initiating a strong sell for China Med. On this shocking news, China Med shares plunged roughly 23% at the end of trading on December 6, 2011.
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SeanHayes@ipglegal.com