Bruised by the high-profile financial scam perpetrated by Shenzhen-listed Yi'an Science and Technology, a total of 363 Chinese shareholders have joined forces in a legal battle against the firm, which siphoned millions of dollars out of shareholders funds over the last few years.
Guo Feng, chief attorney for the shareholders, confirmed to reporters Friday that a legal complaint against the stock price rigging was filed on Thursday in two courts, one in Beijing and one in Guangzhou, involving 176 and 187 traders respectively.
The judges of the intermediate courts have seven days to decide whether civil action will be approved.
The deadline for their decision is next Thursday.
Although the lawyers for the plaintiffs remain confident that the case should have a good chance of being accepted in the courts because of their meticulous preparation, they recognize that it is far from a sure thing.
"The ball is not in our court at this point. It is the judges that have the final stamp approval and all we can do is hope for the best,'' said Wang Jialu, another attorney representing the shareholders, who come from all over the country.
The shareholders are demanding more than 24.6 million yuan (US$2.98 million) in compensation from seven defendants, including Yi'an and its parent firm and four investment consulting firms. Also on the defence seat will be Luo Cheng, Yi'an's legal representative.
An administrative penalty was imposed on the four consulting firms late this April by the China Securities Regulatory Commission (CSRC), the country's top bourse overseer, who said they had manipulated stock prices by falsifying individual trading accounts.
The CSRC confiscated all their illegal revenues, which totaled 498 million yuan (US$60.3 million), and levied a heavy fine of the same amount against them.
The punishment is strong ammunition for the attorneys led by Guo, who see it as hard evidence for their case. It was a key factor in their decision to speed up the legal process over the past few months.
However, the submission of the legal file scheduled originally for this July was held up, as about 100 shareholders did not hand in their relevant materials on the case to the lawyer group.
Initially, these 469 shareholders registered with the lawyer group for compensation, but in the end only 363 joined the legal action.
The shareholders could not be reached for interview Friday as the lawyers said they were averse to media coverage these days because of concerns about the case.
And the Shenzhen-based Yi'an Science and Technology declined to answer China Daily's call Friday.
Legal analysts see the Yi'an case as a test of the government's commitment to protecting the interests of individual investors trying their luck in China's booming but problem-tainted bourses.
Demands have been growing thick and fast over the past two years for more protection for individual stock traders who are easy prey to stock frauds and price rigging by speculators and inside traders.
Yi'an is not the only case. The hundreds of investors cheated by listed firms like Guangxia, Hongguang and Feile, are already a media focus, and are also struggling to have their cases heard by the courts.
The fight is complicated. Yan Yiming, a senior solicitor of Shanghai-based All Bright Law Offices who has been involved in the cases, told China Daily Friday that some of the cases have been rejected by the courts on a number of occasions.
"It is a tall order. For example, in the Hongguang case we were spurned by the court. When we appealed to the higher court, the judge upheld the original court decision. But we haven't given in. We will take it to whatever level is necessary, even the Supreme Court,'' said Yan.
Yan's combative spirit was conveyed to Guo, who said he will try to file the case a second time if the courts in Beijing and Guangzhou reject the case.
"We will ask the courts to list detailed reasons for the rejection and we will try to update it and file again,'' said Guo.
"A persistent fight for improved protection of the interests and rights of individual stock traders, especially the small account holders, is worth the time.''
(China Daily 09/23/2001)
