Robbins Umeda LLP Announces the Filing of a Class Action Suit Against China Medical Technologies, Inc.
Robbins Umeda LLP announces the filing of a federal securities class action by an investor in the U.S. District Court for the Southern District of New York on behalf of purchasers of China Medical Technologies, Inc. (NASDAQ: CMED) shares between November 26, 2007 and December 12, 2011 (the “Class Period”). Concerned shareholders who would like more information about their rights and potential remedies can complete the form below and we will contact you directly. You can also contact attorney Gregory E. Del Gaizo at (800) 350-6003.
The complaint alleges that beginning on November 26, 2007, certain officers and directors at China Medical Technologies issued a series of positive statements to investors about the business condition, future prospects, and true performance of the company that were materially false and misleading. In particular, the complaint alleges that officials at China Medical Technologies withheld material adverse facts from investors that: (1) the company acquired Beijing Bio-Ekon Biotechnology Co., Ltd. (“BBE”) from a third-party seller connected to China Medical’s chairman, Wu Xiaodong; (2) the company overpaid by approximately $20 million to acquire BBE; (3) the BBE acquisition involved the use of fraudulent shell companies; (4) China Medical Technologies overstated accounts receivable in order to inflate sales and net income; (5) the company’s reported profit margins were inflated; and (6) 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 Technologies’ shares declined $0.81 per share, or nearly 24%, to close on December 6, 2011 at $2.57 per share.
Robbins Umeda LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.