(Yicai) Dec. 27 -- A Shanghai court has settled the first class-action lawsuit of China's securities industry, which is also the first special representative litigation case with a company listed on the Shanghai Stock Exchange's Star Market as the main defendant.

Essence Information Technology will pay each of the 7,195 investors participating in the class suit an average compensation of CNY38,900 (USD5,440), with the maximum amount being CNY5 million (USD699,370), the Shanghai court ruled yesterday. The total compensation amount exceeded CNY280 million (USD39.2 million).

Essence, which went public in June 2020, received an administrative punishment on suspicion of fabricating operating data and fraudulent listing by the China Securities Regulatory Commission on April 21. On June 30, the Tianjin-based firm announced it would delist on July 7 under order of the Shanghai bourse.

Twelve Essence investors sued the company, its actual controller, executives, and intermediate agencies on April 28, asking the court to require Essence to compensate them for losses of various types.

 In July, China Securities Small and Medium Investors Service Center won special authorizations from some of the investors and participated in the lawsuit as a representative.

Ending the trial in the form of a settlement can effectively lower investors' costs to safeguard their rights, maximize the guarantee of investors' rights and interests from winning the litigation, give the defendants opportunities to make up for their mistakes, and reduce illegal events' negative impact on the capital market, especially the Star Market, said Li Xiaonie, the lawsuit's presiding judge and deputy head of the Shanghai Financial Court.

The court opted for a settlement to push for the dispute's substantive resolution because the lawsuit's claim is relatively clear, and the listed firms' actual controller, executives, intermediate agencies, and people directly involved have the ability and willingness to compensate, Lin noted.

Editors: Tang Shihua, Futura Costaglione