Kangmei Pharmaceutical Fined $84,600 for $12.6 Billion Fraud
What’s New: Kangmei Pharmaceutical Co. Ltd., the Chinese drugmaker marred by a financial fraud scandal, was fined 600,000 yuan ($84,600) by top securities regulators for inflating revenues and fabricating bank deposits.
Fines ranging from 100,000 yuan to 900,000 yuan were imposed on 21 Kangmei employees for their roles in the violation, the China Securities Regulatory Commission (CSRC) said Thursday. Six executives were banned from working for listed companies or companies in the securities industry for periods ranging from 10 years to life.
Some people involved in the case were turned over to judiciary authorities for criminal investigation, the CSRC said.
Background: Kangmei came under the spotlight over a debt crisis starting in late 2018 and was later investigated by regulators for fraud allegations.
The company, one of the country’s biggest listed drugmakers, was accused of financial reporting fraud involving 88.6 billion yuan ($12.6 billion) of overstatements between 2016 and 2018. Regulators found that the company used fake bank deposit slips to inflate cash reserves, forged documents for nonexistent business activities and transferred company funds to related parties to trade in its own stock.
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