Chinese court rules against Kangmei in 'milestone' case

SHANGHAI, Nov 12 (Reuters) - A Chinese court ruled on Friday against Kangmei Pharmaceutical Co (600518.SS) and some of its former executives, handing victory to investors in China's first class-action lawsuit against corporate fraud.

The ruling by the Intermediate People's Court of Guangzhou was hailed by China's securities regulator as a "milestone" event in the country's capital markets.

Under the ruling, Kangmei must pay 55,326 investors a total of 2.46 billion yuan ($385.51 million) to reimburse their losses. Former Chairman Ma Xingtian and his wife, as well as four former executives, are liable for the obligations.

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Kangmei (600518.SS) was engaged in intentional and systematic financial cheating worth 30 billion yuan ($4.60 billion) between 2016 and 2018, the China Securities Regulatory Commission (CSRC) has concluded.

CSRC said in a statement that the costly penalty against the executives holds the "top evils" responsible, and will help intimidate capital-market wrong-doers.

Kangmei could not immediately be reached for comment on the ruling.

China, which vows "zero tolerance" against accounting fraud, launched the country's first class-action lawsuit against Kangmei last April.

CSRC said that in addition to Friday's ruling, the Foshan Procuratorate is launching criminal charges against former Kangmei Chairman Ma.

($1 = 6.3812 Chinese yuan renminbi)

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Reporting by Shanghai Newsroom, Editing by Timothy Heritage

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