China Medical Technologies, Inc.
China Medical Technologies, Inc. (NASDAQ: CMED)
MURRAY FRANK LLP is investigating securities fraud claims against China Medical Technologies, Inc. (“China Medical Tech” or the “Company”) (NASDAQ: CMED) and certain of its officers, on behalf of purchasers of China Medical Tech’s American Depository Shares (“ADSs”) between April 27, 2007 and August 4, 2011, inclusive (the “Class Period”).
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The investigation concerns violations of the Securities Exchange Act of 1934 (the “Exchange Act”) that occurred when the Company and certain of its officers issued materially false and misleading statements during the Class Period regarding China Medical Tech’s financial performance and business operations and prospects.
Specifically, it is alleged that during the Class Period, the Defendants made false and misleading statements about or knew but failed to disclose that: (1) the Company acquired Beijing Bio-Ekon Biotechnology Co. Ltd. (“BBE”) through a third party seller with ties to the Company’s Chairman, Defendant Wu Xiaodong; (2) the Company overpaid significantly for the acquisition of BBE; (3) the Company used fraudulent shell companies in the acquisition of BBE; (4) prior to its acquisition, BBE was experiencing operating losses, according to filings with Chinese authorities; (5) in order to inflate sales and income figures, the Company overstated accounts receivable; (6) the Company overstated its profit margins; and (7) as a result, the Company’s statements were materially false and misleading.
On December 6, 2011, Glaucus Research Group published a research report alleging in part that China Medical Tech’s CEO had embezzled millions of dollars from the Company through sham acquisitions. Furthermore, the report noted that the Company’s balance sheet contained a number of “red flags.” Specifically, the Company’s reported profits and net income were substantially inconsistent with reported profits and net income of comparable competitors, as were the majority of the Company’s accounts receivable, which indicated that the Company’s reported revenues were inflated as well. On the news, the price of China Medical Tech’s ADSs dropped almost 24%, from a close of $3.38 per ADS on December 5, 2011 to a close of $2.57 per ADS on December 6, 2011, on unusually heavy trading volume.
Subsequently, on December 13, 2011, China Medical Tech announced that the Company intends to implement a debt restructuring plan to improve its balance sheet. On the news, the price of China Medical Tech’s ADSs dropped further, from a close of $3.30 per ADS on December 12, 2011 to a close of $2.87 per ADS on December 13, 2011, on unusually heavy trading volume.
If you purchased China Medical Tech ADSs within the Class Period, you may move the Court, not later than February 17, 2012, to serve as Lead Plaintiff for the class. A Lead Plaintiff is a representative chosen by the Court who acts on behalf of other class members in directing the litigation. You do not need to be a Lead Plaintiff to be included in the class. If you wish to discuss this investigation, or have any questions concerning this notice or your rights or interests with respect to these matters, please contact us.
Contact:
MURRAY FRANK LLP
Bridget Hamill
212-682-1818
800-497-8076
Investigations@murrayfrank.com
www.murrayfrank.com
MURRAY FRANK LLP is investigating securities fraud claims against China Medical Technologies, Inc. (“China Medical Tech” or the “Company”) (NASDAQ: CMED) and certain of its officers, on behalf of purchasers of China Medical Tech’s American Depository Shares (“ADSs”) between April 27, 2007 and August 4, 2011, inclusive (the “Class Period”).
Join the Class Action
Firm Resume
The investigation concerns violations of the Securities Exchange Act of 1934 (the “Exchange Act”) that occurred when the Company and certain of its officers issued materially false and misleading statements during the Class Period regarding China Medical Tech’s financial performance and business operations and prospects.
Specifically, it is alleged that during the Class Period, the Defendants made false and misleading statements about or knew but failed to disclose that: (1) the Company acquired Beijing Bio-Ekon Biotechnology Co. Ltd. (“BBE”) through a third party seller with ties to the Company’s Chairman, Defendant Wu Xiaodong; (2) the Company overpaid significantly for the acquisition of BBE; (3) the Company used fraudulent shell companies in the acquisition of BBE; (4) prior to its acquisition, BBE was experiencing operating losses, according to filings with Chinese authorities; (5) in order to inflate sales and income figures, the Company overstated accounts receivable; (6) the Company overstated its profit margins; and (7) as a result, the Company’s statements were materially false and misleading.
On December 6, 2011, Glaucus Research Group published a research report alleging in part that China Medical Tech’s CEO had embezzled millions of dollars from the Company through sham acquisitions. Furthermore, the report noted that the Company’s balance sheet contained a number of “red flags.” Specifically, the Company’s reported profits and net income were substantially inconsistent with reported profits and net income of comparable competitors, as were the majority of the Company’s accounts receivable, which indicated that the Company’s reported revenues were inflated as well. On the news, the price of China Medical Tech’s ADSs dropped almost 24%, from a close of $3.38 per ADS on December 5, 2011 to a close of $2.57 per ADS on December 6, 2011, on unusually heavy trading volume.
Subsequently, on December 13, 2011, China Medical Tech announced that the Company intends to implement a debt restructuring plan to improve its balance sheet. On the news, the price of China Medical Tech’s ADSs dropped further, from a close of $3.30 per ADS on December 12, 2011 to a close of $2.87 per ADS on December 13, 2011, on unusually heavy trading volume.
If you purchased China Medical Tech ADSs within the Class Period, you may move the Court, not later than February 17, 2012, to serve as Lead Plaintiff for the class. A Lead Plaintiff is a representative chosen by the Court who acts on behalf of other class members in directing the litigation. You do not need to be a Lead Plaintiff to be included in the class. If you wish to discuss this investigation, or have any questions concerning this notice or your rights or interests with respect to these matters, please contact us.
Contact:
MURRAY FRANK LLP
Bridget Hamill
212-682-1818
800-497-8076
Investigations@murrayfrank.com
www.murrayfrank.com