China-based Fanhua Inc. is facing a class-action complaint for allegedly engaging in fraudulent activities.
The company allegedly did not properly disclose improper business practices, including irregular accounting, from April 20 to Aug. 27.
Investors suffered damages from Fanhua's lack of proper disclosure, which was allegedly done to benefit company "insiders" and overstate financial assets and performance metrics. Fanhua must pay damages to affected investors, according to the complaint.
In August, Fanhua rejected allegations of fraudulent activities such as transferring cash to insiders through related-party transactions.
Fanhua CEO Chunlin Wang and CFO Peng Ge were also named as defendants in the complaint filed in the U.S. District Court for the Southern District of New York.
A company spokesperson told S&P Global Market Intelligence that the complaint's allegations are "groundless" and that Fanhua plans to defend itself "vigorously."