China SXT Pharmaceuticals: Investigating Claims

The White Law Group is investigating potential claims involving broker dealers who may have unsuitably recommended China SXT Pharmaceuticals to investors.

Background on China SXT Pharmaceuticals

China SXT Pharmaceuticals, Inc. (NASDAQ: SXTC), a pharmaceutical company, engages in the research, development, manufacture, marketing, and sale of traditional Chinese medicine pieces (TCMP) in China.

In August 2022, China SXT Pharmaceuticals offered shares of its common stock for sale to investors. As of February 28, 2024, the average post offering return was –97.9%. The company’s common stock was traded on the Nasdaq Capital Market, or NASDAQ, under the symbol “SXTC.”

According to its prospectus, investing in SXTC’s securities is highly speculative and involves a high degree of risk.

Latest News

As of October 26, 2023, according to a Globe Newswire article:

China SXT Pharmaceuticals, Inc. announced that on October 19, 2023, NASDAQ notified us that it has determined that for the 10 consecutive business days, from October 5, 2023 to October 13, 2023, the closing bid price of the Company’s ordinary shares has been at $1.00 per share or greater.

Accordingly, the Company has regained compliance with Listing Rule 5550(a)(2) and NASDAQ has closed this matter as of this time.

Performance

As of July 6, 2024, according to Market Watch shares of SXTC are down —77.76% over the last 12 months. 

Risks Associated with Pharmaceutical and Biotech investments

Regulatory Risks – Pharmaceutical companies are heavily regulated by agencies such as the FDA in the United States and the EMA in Europe. Approval processes for new drugs are lengthy and uncertain. Failure to get approval or delays in approval can severely impact a company’s stock price.
Research and Development (R&D) Risks – The pharmaceutical industry relies heavily on the successful development of new drugs. High R&D costs do not guarantee a successful outcome, and many drug candidates fail during clinical trials.
Market Competition – The pharmaceutical industry is highly competitive. Companies face competition from other pharmaceutical companies, as well as from generic drug manufacturers once patents expire. This can impact market share and profitability.
Patent Expiry – Pharmaceutical companies rely on patents to protect their products. When a patent expires, generic manufacturers can produce cheaper versions of the drug, leading to a significant drop in sales and revenue for the original manufacturer.

Broker Due Diligence

Broker due diligence is a process undertaken by brokerage firms to ensure they are recommending and selling investment products appropriate for their clients. This process protects the interests of the brokerage firm and its clients by ensuring that the investments offered are suitable for the client’s investment objectives, risk tolerance, and financial situation.

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to disclose the associated risks adequately, they may be found liable for investment losses in a FINRA arbitration claim. Fortunately, FINRA provides an arbitration forum for investors to resolve such disputes.

Class Action vs. Individual FINRA Arbitration Lawsuit

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

Free Consultation

If you have suffered investment losses in China SXT Pharmaceuticals, you may have recovery options. The securities attorneys at The White Law Group offer free consultations and can be reached at 1-888-637-5510.

About The White Law Group 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. The firm represents investors across the country in claims against their brokerage firms.