The Guangzhou Intermediate People’s Court in China has rejected Foshan Lighting’s appeal to transfer the case to Foshan Intermediate Court, according to a report by Chinese-language Securities Times. The Chinese LED manufacturer received a ticket from China Securities Regulatory Commission’s Guangdong branch nearly a year ago on March 7, 2014 over stock frauds.

On Feb. 28, 2014, Hsieh Liang, Lawyer for The Guangdong International Business Law Firm in Guangdong received the Guanzhou court ruling on Foshan Lighting’s appeal to change courts. The court rejected the company’s application stating “the company’s stock fraud case falls under special civil compensation regulations, making the case ineligible to normal legal proceedings of trialing civil cases in the local court (Foshan Intermediate People’s Court).”

The company filed on Jan. 21 its request to transfer the stock fraud case to Foshan Intermediate People’s Court. Foshan Lighting argued China’s Civil Procedure Laws allowed the prosecution to take place in the local Foshan court.  

Foshan Lighting investors involved in the case now total 1,187 with compensation demanded amounting to RMB 160 million (US$ 26.02 million) as of March 3, 2014. There are currently two ongoing investor compensation cases. Investors accused the company of misstating company finances.

Foshan Lighting recently announced it had received a second investment fraud lawsuit from the Guangzhou Intermediate People’s Court. The number of plaintiffs tallied 672, and compensation sought aggregated to RMB 89 million.

The company’s 2014 profits will be affected if Foshan Lighting loses the first compensation lawsuit. There are 515 plaintiffs in the first securities fraud case, and the sum demanded for compensation reached RMB 73.42 million accounting for 15.6 percent of the company’s profits. However, it is possible that Foshan Lighting will not be footing all the compensation fee in the end. Court rulings for the first lawsuit are still to be released.

The company is likely to be seeing more legal action in the future. “Many investors are still speculating and waiting for court rulings from the first compensation case before they file plaintiffs,” said Hsieh. Many Foshan Lighting investors sought advice from the firm, but only 50 investors have commissioned the law firm.

Foshan Lighting investors that incurred financial losses excluding losses from selling company stocks, during July 15, 2010 to July 5, 2012 are eligible for compensations, and can seek out an attorney, pointed out Hsieh. According to China’s legal regulations, the case’s limitations of actions is effective within two years. Investors protecting their rights are demanding Foshan Lighting to compensate for financial losses, commission fees, interest, stamp duty and others.

However, it may be difficult for investors to acquire compensation as the two cases are still ongoing. No final rulings have been reached for the first case, yet.