Administrative penalty seems inadequate given seriousness of case: lawyers

By Zhang Hongpei Source:Global Times Published: 2017/9/6 20:23:39

Hundreds of investors of Jiangsu Yabaite Technology Co, which was officially confirmed fabricating overseas projects and falsifying announcements, are preparing documents to make claims, lawyers handling the case told the Global Times on Wednesday.

"So far, about 2,000 investors have consulted us about the claims, among which 600 investors have provided complete documents including printed trading records and letters of authorization," Wang Zhibin, a partner with Shanghai Bright & Young Law Firm, told the Global Times.

The value of claims for each investor ranges from thousands of yuan to 1 million yuan ($153, 280), Wang noted.

"Most investors are indignant and startled by the big lie, and also concerned about the prospects of the company since they still possess its stocks," Wang said, noting that some investors are reluctant to sell the stock and lose money, hoping it might turn around someday.

Investors buy a company's shares based on their trust in its announcement, but if the disclosure in the announcement is false, it will bring losses to the investors as the share prices will eventually drop from high level when the truth is revealed, Wang noted.

The filings of investors can be brought to court when the China Securities Regulatory Commission (CSRC) announces final penalties for the firm.

"I assume the CSRC will soon announce the result, probably within September," Wang forecast.

On May 12, the regulator said in a statement on its website that it would impose a 600,000 yuan ($92,000) fine, the maximum according to current securities law, on Jiangsu Yabaite for violating China's information disclosure regulations.

"Given the large scale of money Yabaite has looped in and the unethical behavior, the administrative penalty is really not enough," Li Jian, deputy director at Zhejiang Yufeng Law Firm, told the Global Times on Wednesday.

In terms of other types of penalties such as civil liability, Li hopes more investors can take legal action against such illegal behavior in the securities market, which will play as a deterrent by raising the costs of such behavior.

Meanwhile, the court is expected to be more supportive of claims to the victimized investors, Li said.

The CSRC also noted that Jiangsu Yabaite had fabricated an unspecified project in Pakistan and other trade deals to artificially add 580 million yuan to its revenue and 260 million yuan to its profits.

According to CSRC's investigation with relevant Pakistani authorities, no economic ties or capital exchanges have been conducted between Jiangsu Yabaite and any company or individual in Pakistan, Geng Shuang, a spokesman for China's Ministry of Foreign Affairs, said on Monday.

"Normally, overseas projects of a listed company are attractive for investors, showing it has good operational ability in the international market," Wang said.

Particularly for Jiangsu Yabaite, it faked a project in Pakistan, a country involved in the China-proposed Belt and Road initiative, which is likely to bolster investors' confidence in the company, he added.

Given the seriousness of the case, lawyers said that both the law enforcement entity and the institution which provided financial services for company such as the initial public offering, should strictly fulfill their responsibilities.


Newspaper headline: Yabaite investors actively pursuing lawsuit for claims


Posted in: INDUSTRIES,COMPANIES

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