Sinovac Biotech Ltd. (Sinovac) is a Chinese biopharmaceutical company that focuses on vaccines that protect against human infectious diseases. Incorporated and with principal offices in China, its common shares were traded on the NASDAQ Stock Market.
In a 6-K filed on December 23, 2016, Sinovac disclosed that it had begun an internal investigation into allegations raised in a research report by Geoinvesting, a market research firm in the U.S. and China. The allegations in the report became the subject of five judgments the Beijing People’s Court issued in 2016 and 2017 related to corrupt conduct allegedly engaged in by a former official of the Center for Drug Evaluation in CFDA, his wife and his son. Specifically, the official and his wife had solicited and accepted payments from various individuals involved in the vaccine products industry. According to the judgments, one of the individuals solicited by the official was Weidong Yin, Sinovac’s chairman, president and chief executive officer. In all, Mr. Yin was alleged to have made three payments, and arranged for a loan, to the official and his wife, in the total amount of $77,000 between 2002 and 2011, but Mr. Yin was not charged with any offense or improper conduct and cooperated as a witness.
Based on this disclosure, the SEC notified the company of an inquiry into the allegations in February 2017 and subsequently issued a subpoena to the company in April 2017. The DOJ notified Sinovac in September 2017 that it had initiated an inquiry into the allegations. The company said it is cooperating with both agencies.
In its 20-F filed on November 22, 2017, Sinovac detailed the allegations noted above and further disclosed that in June 2017, the company became aware of certain judgments based on bribery charges issued by Chinese courts against various officials of the Chinese Center for Disease Control (the "CDC"). The judgments referenced eight of Sinovac's former and current salespersons, though no charges were brought against the company or any of its directors, officers or employees as defendants. Following discovery of these judgments, it expanded its internal investigation to review the company's sales practices and policies.
On August 20, 2018, Sinovac announced that the SEC had concluded its investigation and would not be pursuing an enforcement action against the company.
On September 17, 2018, the company announced that the DOJ had closed its investigation and would not be pursuing an enforcement action against the company.