Molecular Data

Kurta Law is investigating broker recommendations of Molecular Data (NASDAQ: MKD). 

These investments were extremely risky and therefore unsuitable for many investors. “Unsuitable” investments violate FINRA Rule 2111 when Regulation Best Interest. These are securities rules and regulations meant to prohibit deception and manipulation in the sale of securities. There is no excuse for brokers to recommend investments that are overly risky for their investors — Regulation Best Interest requires brokerage firms to perform their due diligence and understand the risks associated with an investment they approve it for recommendation to their clients.  

If you believe you may have suffered losses as a result of broker misconduct, contact Kurta Law today. Call (877) 600-0098 or email info@kurtalawfirm.com.  

The Offering  

The prospectus dated September 17, 2021, announced that Molecular Data was offering 23,390,000 common units and 16,083,684 pre-funded units.  

The common units each consist of one American Depository Share, each of which represents three Class A ordinary shares, and one warrant to purchase one American Depository Share. American Depository Shares are shares of a foreign-based company that are sold on the American exchange and are denoted in U.S. currency.  

As of writing, Molecular Data was trading for less than $1 per share. 

About Molecular Data 

According to the prospectus, Molecular Data is a “technology-driven platform in China’s chemical industry.” They offer e-commerce solutions and warehousing and logistics solutions.  

Risks Associated with Molecular Data 

The following risks are clearly identified in the prospectus. Any broker should have known about these risks, as well as whether the investment posed too much risk for their investor.  

Issuance of ADS May Depress Share Price 

The issue of ADSs to investors could cause the price of ADSs to decline.  

Management Discretion  

Management has broad discretion when it comes to allocating the net proceeds from this offering. Investors will be relying on management’s judgment and they may invest in a way that does not yield a favorable return.  

Potential Volatility  

Market prices of the ADS may be volatile or decline regardless of operating performance. These are some of the factors that may cause prices to fluctuate:  

• Actual or anticipated fluctuations in revenue  
• Financial projections provided to the public or failure to meet those projections  

• Negative coverage or no coverage by securities analysts  
• Announcements by competitors of new products or features 
• Lawsuits threatened or filed against the company  

Chinese Regulations  

New Chinese regulatory requirements could affect the business’s operations.  

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Kurta Law Can Help  

Contact Kurta Law today for a free case evaluation – keep in mind that you have a limited time to file a claim. Our attorneys do not collect a fee unless we win your case. If you have any questions, call (877) 600-0098 or email info@kurtalawfirm.com.