NEW YORK, Feb. 3, 2012 /PRNewswire/ -- Faruqi & Faruqi,
LLP today announced that it has filed a securities class action
lawsuit against China Medical Technologies, Inc. ("China Medical"
or the "Company") (NASDAQ: CMED) and certain of its senior
executives. The action (No. 12-CIV-0882), filed in the United
States District Court for the Southern District of New York, asserts claims under the Securities
Exchange Act of 1934 ("Exchange Act") on behalf of all persons who
purchased or otherwise acquired CMED's American Depositary Shares
("ADS") during the expanded period between February 7, 2007 and December 12, 2011, inclusive (the "Class
Period").
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A copy of the complaint can be viewed on the firm's website at
www.faruqilaw.com/CMED.
China Medical and certain of its senior executives are charged
with issuing a series of materially false and misleading statements
in violation of Section 10(b) and 20(a) of the Exchange Act and
Rule 10b-5 promulgated thereunder. Specifically, defendants
misstated and failed to disclose that the Company engaged in
suspicious and improper related-party transactions and misstated
its receivables in order to artificially inflate sales and net
income. As a result of defendants' false and misleading
statements and material omissions, China Medical ADS traded at
artificially inflated prices during the Class Period, reaching a
high of $57.50 per share on
February 28, 2008.
On December 6, 2011, the Glaucus
Research Group published a report that revealed that China
Medical's Chief Executive Officer engaged in a related party
transaction with the Company pursuant to which the Company
improperly funneled approximately $20
million to the Company's Chief Executive Officer. The
report also concluded that the Company's profits, revenue and net
income were severely inflated. On this news, China Medical's
shares declined nearly 24% on unusually high trading volume.
Moreover, on December 13, 2011, China
Medical further disclosed that the Company intended to restructure
its debt to improve its balance sheets. This news caused
China Medical's shares to decline an additional 13% to close at
$2.87 per share, on unusually high
trading volume.
The true facts, which were known by the defendants but concealed
from the investing public during the Class Period, were as
follows: (1) several China Medical acquisitions during the
Class Period were the result of suspicious and/or improper related
party transactions with third-party sellers connected to the
Company; (2) the Company significantly overpaid for at least one
acquisition to the detriment of Company shareholders and to the
benefit of China Medical's Chairman of the Board and Chief
Executive Officer, defendant Xiaodong
Wu; (3) the Company overstated accounts receivable in order
to inflate reported sales, profit margins and net income; and (4)
as a result of the foregoing, the Company's financial performance,
expected earnings and business prospects were false and misleading
and lacked a reasonable basis when made. As a result, the
Complaint alleges that China Medical violated provisions of the
Exchange Act during the Class Period by issuing false and
misleading press releases, financial statements, filings with the
Securities and Exchange Commission and statements during investor
conference calls.
Plaintiff now seeks to recover damages on behalf of himself and
all other investors who purchased or acquired China Medical ADS
during the Class Period, excluding defendants and their
affiliates. Plaintiff is represented by Faruqi & Faruqi,
LLP, a national securities law firm with extensive experience in
prosecuting class actions involving corporate fraud.
If you wish to serve as lead plaintiff for the proposed class in
this action, you must file a motion with the Court no later than
February 17, 2012.
If you purchased China Medical ADS during the Class Period and
wish to obtain information concerning joining this action, you can
do so under the "Join Lawsuit" section of our website or by
clicking: http://www.faruqilaw.com/CMED. If you wish to
discuss this action or have any questions concerning this notice or
your rights or interests, you can also contact us by calling
Richard Gonnello or Francis McConville toll free at 877-247-4292 or
at 212-983-9330 or by sending an e-mail to
rgonnello@faruqilaw.com or fmcconville@faruqilaw.com.
Contact:
FARUQI & FARUQI, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
Attn: Richard Gonnello,
Esq.
rgonnello@faruqilaw.com
Francis McConville, Esq.
fmcconville@faruqilaw.com
Telephone: (877) 247-4292 or (212) 983-9330
SOURCE Faruqi & Faruqi