Pacific Bepure Industry's victory in a lawsuit over allegations of cooking the books offers hope for beleaguered Chinese businesses in the United States. Shareholder Great Dynasty International Financial Holdings had filed for US$5 million in damages from Fujian-based footwear manufacturer Pacific Bepure for allegedly inflating revenue and profit in 2010 and 2011. It also alleged Pacific Bepure chief executive Li Haiting and his son Li Zhiyan artificially deflated the company's revenues and profit to the Chinese authorities. A district court judge in California dismissed the complaint in December last year. Last month, the same court sanctioned the two lawyers for Great Dynasty - Sally Mimms and John Kloecker from Locke Lord - because it found "clear and convincing evidence" that they had made claims that were "both reckless and frivolous, and amounted to conduct tantamount to bad faith". Both lawyers did not respond to inquiries from the South China Morning Post . Geoffrey Sant, a special counsel at Dorsey & Whitney, which represented Pacific Bepure, said this was the first time a Chinese company facing legal action under securities laws in the US had obtained damages from lawyers who sued the company. The judge sanctioned Mimms and Kloecker by ordering them to pay the defendant's legal fees, estimated at US$163,000. "I believe this is the only such instance involving a Chinese company sued under securities litigations ever in the US to win this kind of award," Sant said. "It will have a huge impact on securities litigations against Chinese companies in the future, as plaintiffs may be less eager to bring suits against [Chinese] companies listed in the US after seeing the results in this case." Stephen Gillers, a law professor at New York University, said it was difficult to establish this was the first such case. "This is a routine decision sanctioning lawyers for wasting the court's time with a meritless case, as the judge viewed it," Gillers said. "The fact that a US court tossed out a securities case against a foreign company, with sanctions against the US lawyers who brought it, should give foreign companies, including from China, confidence that US courts will apply the same legal principles regardless of the nationality of the parties." Sant said the decision might increase Chinese companies' willingness to raise capital or list on US exchanges. Li Haiting said the order would "create a more positive environment for Chinese companies to raise capital in the US" and "correct the misimpression in America that Chinese companies are all bad". Over the past four years, half of all securities lawsuits against non-US companies had been against China, Sant said. Pacific Bepure sells shoes in China and distributes in South America and online. Chinese companies have lately been at the receiving end of US short sellers, which accuse them of fraud. Anonymous Analytics, a group of anonymous analysts, in a report alleged fraud at Tianhe Chemicals Group, as did Emerson Analytics, a group of equity analysts, at Shenguan Holdings Group, a sausage casing maker. Both companies have denied the allegations and threatened to sue their accusers for libel.