政府新闻
法院为成千上万的投资者赢得了赔偿 2023-12-26
With the help of the Shanghai Financial Court, nearly 7,200 investors have received compensation of over 284 million yuan (US$39.75 million) from a company that was listed on the sci-tech innovation board Star Market, the court reported on Tuesday.
"It is the first class action in China which closed through pre-trial mediation. It provides a new avenue for handling similar cases," said Lin Xiaonie, vice president of the court and chairman of the bench.
In April, the China Securities Regulatory Commission found that Zeda Essence (Tianjin) Technology Company, the first batch of companies listed on the STAR Market was engaged in intentional cheating, concealing and omission in its prospectus and annual reports between 2020 and 2022.
A document of administrative punishment issued by the commission in April shows that the company was fined over 86 million yuan and four related people, including its controller and director, were also fined from 38 million yuan to 2.5 million yuan. The company was removed from the STAR Market compulsorily.
In July, the China Securities Investor Service Center, a government-affiliated body, sued Zeda Essence and 11 other relevant people and firms on behalf of about 60 individual investors.
According to the Chinese regulations and law governing securities disputes, special representative litigation applied to the case, which meant that all victims can be included in the plaintiff unless they propose to withdraw.
"This is a severe fraud. The litigation has a deterrent effect on this company and even the entire capital market," Lin said.
After promulgating the lawsuit information and the online and offline hearing about the mediation agreement draft, 27 investors withdrew from the class action.
Investors attend the hearing about the mediation agreement draft on December 12 in the Shanghai Financial Court.
After around four months of negotiation, it was decided that 7,195 investors could get more than 284 million yuan for their economic loss, with an average compensation of 38,900 yuan per person.
"Although it is not easy to reach a consensus among so many people, mediation is a win-win situation for both the plaintiff and defendant from time and money aspects," said Zhu Yingqi, chief judge of the case.
Zhu said the court usually needs to spend more than a year on handling such cases. For investors, a class action can reduce their cost of safeguarding legitimate rights and interests. And pre-trial mediation can enable them to receive compensation earlier, which better protects their rights and interests.
For companies, they can avoid the negative impact of long lawsuits on their operations, she said.
"After long-term litigation, some companies cannot continue to operate because of litigation expenses and bad reputation. Even if the court supports the investor's appeal finally, the bankrupt defendant has no money to compensate," she said.
"In this case, the company actively cooperated with courts for compensation during pre-trial mediation, which gained understanding from investors and also secured an opportunity for turning over a new leaf," she added.
It also reduces the negative impact on the capital market, especially the STAR Market, Lin said.
Those who withdrew from the case can sue Zeda Essence and other related people and companies by themselves, Lin added.
Source: Shanghai Daily
