Thousands of Investors Seek $580 Million in Kangde Xin Fraud Case
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Once valued at more than 100 billion yuan, Kangde Xin was regarded as a blue-chip stock before it defaulted on its debt in January 2019
A massive securities fraud lawsuit against the delisted Kangde Xin New Composite Material Group Co. Ltd. is proceeding, with the company and 39 other defendants summoned to court to face a claim from more than 8,000 retail investors seeking over 4.1 billion yuan ($580 million) in damages.
The defendants named in the securities misrepresentation case include Kangde Xin’s former executives, its controlling shareholder, and a number of financial service providers, such as Bank of Beijing Co. Ltd., accounting firm Ruihua Certified Public Accountants LLP, DeHeng Law Offices and United Credit Ratings Co. Ltd., according to a company filing on Monday.
The lawsuit marks a significant test of China’s emerging class-action system and the extent to which professional firms can be held accountable in the wake of one of the country’s most infamous corporate frauds. As the case heads toward trial, it also underscores the legal avenues available to individual investors who suffered major losses.
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- Over 8,000 retail investors are suing delisted Kangde Xin and 39 others for 4.1 billion yuan ($580 million) over securities fraud.
- Defendants include former executives, the controlling shareholder, and financial service firms; former shareholder Zhong Yu was sentenced to 15 years in prison.
- The case, accepted as a standard class-action in December 2024, is a major test for China’s class-action system and could set accountability precedents.
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Who’s Who
- Kangde Xin New Composite Material Group Co. Ltd.
- Kangde Xin New Composite Material Group Co. Ltd. was a blue-chip stock, once valued over 100 billion yuan, until its delisting in May 2021 due to a major securities fraud. The company inflated profits by over 10 billion yuan, and its controlling shareholder misappropriated over 50 billion yuan. Currently, it faces a class-action lawsuit from over 8,000 retail investors seeking 4.1 billion yuan in damages.
- Bank of Beijing Co. Ltd.
- Bank of Beijing Co. Ltd. is implicated in a massive securities fraud lawsuit against Kangde Xin New Composite Material Group Co. Ltd. The bank is among 39 defendants, including Kangde Xin's former executives and financial service providers, facing claims from over 8,000 retail investors seeking more than 4.1 billion yuan in damages. The bank's challenge to the court's jurisdiction was rejected, allowing the case to proceed.
- Ruihua Certified Public Accountants LLP
- Ruihua Certified Public Accountants LLP (瑞华会计师事务所) is an accounting firm named as a defendant in a securities fraud lawsuit against Kangde Xin New Composite Material Group Co. Ltd. They, along with other financial service providers, are being sued by over 8,000 retail investors seeking more than 4.1 billion yuan in damages. Ruihua challenged the court's jurisdiction but its appeal was rejected.
- DeHeng Law Offices
- DeHeng Law Offices is among the 39 defendants, including financial service providers, facing a massive securities fraud lawsuit. This lawsuit involves over 8,000 retail investors seeking 4.1 billion yuan in damages from the delisted Kangde Xin New Composite Material Group Co. Ltd.
- United Credit Ratings Co. Ltd.
- United Credit Ratings Co. Ltd. is named as a defendant in a securities misrepresentation lawsuit involving Kangde Xin New Composite Material Group Co. Ltd. This financial service provider is among 39 defendants, including former executives and other firms, facing a claim from over 8,000 retail investors seeking more than 4.1 billion yuan in damages due to Kangde Xin's alleged fraud.
- Zhejiang Zhongtai Chuangying Asset Management Co. Ltd.
- Zhejiang Zhongtai Chuangying Asset Management Co. Ltd. is an affiliate of the Zhongzhi Enterprise Group that has filed a separate lawsuit related to the Kangde Xin New Composite Material Group Co. Ltd. securities fraud. This lawsuit names 11 defendants, including Kangde Xin and Bank of Beijing, and seeks 5.2 billion yuan in damages.
- Zhongzhi Enterprise Group
- Zhongzhi Enterprise Group is mentioned in the context of a separate lawsuit against Kangde Xin. An affiliate of Zhongzhi Enterprise Group, Zhejiang Zhongtai Chuangying Asset Management Co. Ltd., filed a lawsuit seeking 5.2 billion yuan in damages from Kangde Xin and 10 other defendants, including Bank of Beijing.
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What Happened When
- March 22, 2013：
- Start of period during which eligible investors purchased Kangde Xin shares.
- January 22, 2019：
- End of period for eligible Kangde Xin share purchases; company defaulted on its debt, scandal was exposed.
- May 2021：
- Kangde Xin was delisted.
- December 2024：
- Zhong Yu, Kangde Xin’s former controlling shareholder, was sentenced to 15 years in prison for multiple offenses. On the same day, the Suzhou Intermediate People’s Court accepted the class-action lawsuit.
- After December 2024：
- Several defendants, including Bank of Beijing and Ruihua, challenged court jurisdiction; Jiangsu High People’s Court rejected the appeals.
- May 2025：
- Zhejiang Zhongtai Chuangying Asset Management Co. Ltd. filed a separate lawsuit seeking 5.2 billion yuan in damages.
- Late November 2025：
- The court appointed five lead plaintiffs to represent the group of investors.
- December 9, 2025：
- A company filing detailed the defendants named in the case.
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