According to an article from October 2007, Plaintiffs in this individual class action, one of several hundred consolidated before this Court, have reached a settlement agreement with the Defendants and seek the Court's approval of the terms. The Complaint, which includes claims against Underwriter Defendants Goldman Sachs, Credit Suisse First Boston, and Robert Fleming, Inc., has withstood a motion to dismiss, the parties have pursued court-ordered mediation, engaged in extensive discovery, and, thereafter, achieved settlement through direct negotiations. … the Court deems the settlement amount of $ 2.5 million or an average recovery of $ .08 per share (before deductions for attorney fees and costs) acceptable and approves the deal preliminarily.
On March 1, 2007, the Court entered the Opinion and Order # 94329 signed by U.S. District Judge Shira A. Scheindlin. According to the Order, the plaintiffs’ motion for preliminary approval of the proposed settlement is granted. The proposed settlement class is certified consistent with the settling parties. The proposed settlement is preliminarily approved. A conference is scheduled for March 16, 2007, at 5:00 P.M., in Courtroom 15C. The settling parties are hereby directed to submit on or before March 9, 2007, a revised proposed class settlement notice that is consistent with this Opinion.
According to the Company’s FORM 20-F for the fiscal year ended March 31, 2005, on November 24, 2003, plaintiffs' counsel in the Khanna action and Shives action filed a Consolidated Amended Securities Class Action Complaint ("Consolidated Complaint") which incorporates the material allegations from Khanna action and Shives action. On January 30, 2004, the Company and its officers and directors filed a motion to dismiss the Consolidated Complaint. The underwriter defendants filed a separate motion to dismiss. On October 15, 2004 the District Court judge granted in part and denied in part the motions to dismiss and set a pre-trial discovery schedule. At a status conference held on January 26, 2005, the District Court judge set a deadline for pre-trial fact discovery and referred the parties to a magistrate judge for settlement discussions.
The class action lawsuit was filed allegeing violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. On June 14, 2000, Rediff commenced an IPO of 4.6 million of its ADSs at an offering price of $12 per share. In connection therewith, Rediff filed a registration statement, which incorporated a prospectus (the "Prospectus"), with the SEC. The complaint alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) Rediff's advertising client base was composed primarily of startups, while the Prospectus listed internationally known and well-heeled companies as "representative" of its advertising clients; (ii) prior to the IPO, Rediff had experienced significant problems with its email software systems which hindered its ability to attract viewers and advertisers to its Internet portal; (iii) a significant number of advertising contracts would terminate by December 2000, and (iv) the Prospectus stated that defendant Li had graduated from Stanford University, when he had not. On March 22, 2001, Rediff issued a press release announcing that revenue for its fourth fiscal quarter of 2001 would decline by 30%-35% from the prior quarter's sales. Also on March 22, 2001, it was reported that defendant Li had not graduated from Stanford University. On May 3, 2001, the price of Rediff ADSs closed at $3.12 -- a 74% decline from its IPO price of $12 per ADS.