(Yicai Global) May 12 -- Feilo Acoustics has been ordered by a Shanghai court to pay 315 individual plaintiffs CNY123 million (USD19 million) in compensation for investment losses incurred due to the Chinese lighting equipment maker’s financial fraud in the first judgement of its kind in the country.

Feilo Acoustics has been found guilty of inflating its profit and revenue, which constitutes fraud, and must assume civil responsibility and pay compensation, the Shanghai Financial Court said yesterday.

Some 315 individual investors elected five representatives in August last year to petition against Shanghai-based Feilo Acoustics, claiming that the firm’s cooking of the books caused them great losses.

They were taking advantage of new litigation issued by the Supreme People’s Court of China on July 31, 2020 that permits small and medium-sized investors to represent themselves in court, as opposed to through a representative institution, to protect their rights and interests in securities disputes.

In July 2019, Feilo Acoustics was probed by the Shanghai securities regulator which discovered false statements in the firm’s 2017 semi-annual and third-quarter reports as well as its declarations of business growth, and the company was penalized.

Investors who held the company’s shares as well as equity index futures or exchange-traded funds weighted by the firms’ stock from April 13, 2018 and suffered losses can sue the firm for compensation, Song Yixin, a lawyer at Shanghai Honor Law Firm, told Yicai Global.

Feilo Acoustics’s stock price [SHA:600651] was trading flat today at CNY3.41 (USD0.53) at 2 p.m. China time, giving it a market capitalization of CNY8.45 billion (USD1.3 billion). Its share price has dropped 70 percent since November 2017.

Editor: Kim Taylor