Caixin Explains: What China’s First Securities Class-Action Lawsuit Means for the Stock Market

Long-suffering shareholders in debt-ridden Kangmei Pharmaceutical Co. Ltd. (600518.SH) who lost money as a result of an 88.6 billion yuan ($13.9 billion) fraud have moved closer to winning compensation after two court rulings over the past three weeks.

On Nov. 12, a court in Guangzhou made a landmark ruling in the country’s first securities class-action lawsuit, ordering Kangmei to pay 2.46 billion yuan to more than 50,000 shareholders who lost money because of a massive fraud at the company.