Shanghai Real Estate Development loses lawsuit over securities false statement liability; Shanghai Financial Court rules that it must compensate investors for their losses

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March 16, 2026 – Tianyancha data shows that the China Judgments Online recently published a court document involving Shanghai Industrial Development Co., Ltd. as the defendant. Case number: (2025) Hu 74 Min Chu 164. The case concerns securities false statements liability dispute. The court is the Shanghai Financial Court. The judgment date is October 22, 2025. Shanghai Industrial Development Co., Ltd. lost the case and is required to compensate the plaintiff, Dong Xuemei, for a total of 36,880.12 yuan in damages for investment loss differences, commission losses, and stamp duty losses. Other defendants—Tang Jun, Xu Xiaobing, Zeng Ming, Wang Liangjun, Yuan Jixing, and Guo Weimin—are each liable for joint compensation within different proportional ranges.

Below is a detailed report:

1. Basic case information

Plaintiff Dong Xuemei claims that Shanghai Industrial Development Co., Ltd. (hereinafter “Shangshi Development”) is a listed company on the A-share market. In January 2023, it was investigated by the China Securities Regulatory Commission for suspected information disclosure violations. In April 2024, the Shanghai Securities Regulatory Bureau issued an administrative penalty decision confirming that Shangshi Development’s annual reports from 2016 to 2021 contained false records and other violations. Dong Xuemei bought Shangshi Development’s stock from the date of false statement implementation (March 29, 2017) to the disclosure date (January 12, 2022), incurring losses. She demands that Shangshi Development and responsible persons compensate for her losses.

2. Claims of the parties

Plaintiff Dong Xuemei requests the court to order Shangshi Development to pay 49,840 yuan for investment loss differences, 14.95 yuan for commission losses, and 49.84 yuan for stamp duty losses, totaling 49,904.79 yuan, and to hold other defendants jointly liable.

Defendant Shangshi Development agrees with the court’s findings on common facts and issues and agrees to compensate based on the loss assessment opinion issued by the Shanghai Gaojin Financial Research Institute. Other defendants—Zeng Ming, Xu Xiaobing, Tang Jun, Yuan Jixing, Wang Liangjun, and Guo Weimin—argue that they did not have subjective intent, exercised reasonable caution, and that administrative penalties do not necessarily entail civil liability. They request the court to dismiss the plaintiff’s claims.

3. Court’s findings of fact

4. Shangshi Development’s financial statements from 2016 to 2021 inflated revenue by 4.722 billion yuan and inflated total profits by 614 million yuan. The false statement date was March 29, 2017, and the disclosure date was January 12, 2022. The reference date was March 1, 2022, with a share price of 3.95 yuan.

5. The subsidiary Shanghai Ding Co., Ltd., whose chairman Cao organized financial fraud, caused the false records in Shangshi Development’s annual reports. Cao has been criminally convicted.

6. The financial director stationed at Ding repeatedly sent emails to senior management warning of financial irregularities, but relevant executives did not respond appropriately.

7. According to the loss assessment by Shanghai Gaojin Financial Research Institute, Dong Xuemei’s investment loss difference was 36,832.24 yuan, commission loss was 11.05 yuan, and stamp duty loss was 36.83 yuan, totaling 36,880.12 yuan.

8. Court’s opinion

9. Regarding loss assessment, the court believes that the investment loss difference should be calculated with interest and principal adjustments according to the “Judicial Interpretation on False Statements,” and the assessment results from Shanghai Gaojin Financial Research Institute can serve as a basis.

10. Regarding liability, all defendants lacked subjective intent to make false statements but were grossly negligent: Zeng Ming, as chairman, failed to pay attention to abnormal warnings; Tang Jun, as CEO and director, did not independently assess Ding’s risks; Xu Xiaobing, as CEO, received abnormal warnings but did not verify; Yuan Jixing, as financial director, did not pay attention; Wang Liangjun, as vice president responsible for Ding, did not pay attention; Guo Weimin, as Ding’s director, received warnings but did not verify.

11. Judgment

The court orders Shangshi Development to pay Dong Xuemei 36,880.12 yuan in damages; Zeng Ming to bear joint liability within 5%, Tang Jun within 3%, Xu Xiaobing within 1%, Yuan Jixing within 4%, Wang Liangjun within 2%, and Guo Weimin within 1%. The case acceptance fee is to be borne proportionally by the parties.

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