(CN) - Sinovac investors are taking the biopharm firm's CEO to court for the alleged bribery of a Chinese official ahead of $400 million go-private deal.
Shouqi Luo sued Sinovac, a Chinese vaccine developer, over revelations that CEO Weidong Yin bribed a member of the Chinese Food and Drug Administration to gain approval for a clinical vaccine trial.
The alleged bribery was reported in December 2016 by the analyst firm GeoInvesting, LLC, and caused Sinovac shares to fall $0.10 per share from $6.05 to $5.55 per share.
The company announced an investigation and the Securtieis and Exchange Commission subpoenaed its internal documents, causing its shares to fall further.
In May 2017, Sinovac said it would not be able to file its 2016 annual report on time because it needed additional time for its internal investigation of the purported bribery incident. On this news, shares slid to a low of $4.64 on May 19.
However, Sinovac announced a $400 million deal to go private on June 23, a transaction spearheaded by the accused CEO Yin and which would delist the company from the NASDAQ.
Luo's class action seeks damages for investors who acquired Sinovac shares between April 30, 2013 and May 16, 2017.
"The market price of the company's securities was artificially inflated during the class period," the complaint states, because the company repeatedly told investors it was in compliance with the U.S. Foreign Corrupt Practices Act which forbids bribing foreign officials.
The class is represented by Laurence M. Rosen with the Rosen Law Firm in South Orange, New Jersey and Peretz Bronstein with Bronstein, Gewirtz & Grossman in New York.