According to a press release dated October 9, 2006, SINA Corporation, a leading online media company and mobile value-added service (MVAS) provider for China and for the global Chinese communities, announced that the United States District Court for the Southern District of New York has dismissed, without leave to amend, a consolidated securities class action complaint filed against the Company and certain of its directors and officers. On September 25, 2006, Judge Buchwald issued an order granting the defendants' motion to dismiss the amended consolidated complaint in its entirety, without leave to amend. In the dismissal order, Judge Buchwald held that "the complaint altogether fails to support the conclusion that [SINA] acted with intent to deceive or defraud the public or that they were reckless in this regard."
The original complaint charges SINA and certain of its officers with violations of the Securities Exchange Act of 1934.
More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company was increasingly relying on services related to "fortune telling" advertising, like horoscopes and astrology, in order to meet its earnings forecasts and generate a positive revenue stream; (2) that the Chinese government had clamped down on "fortune telling" advertising and the resulting clampdown on "fortune telling" advertising would have a material effect on the Company's revenue stream; (3) that China Mobile Communication Corp.'s recent change in its billing process for multimedia messaging services SINA provides to China Mobile subscribers had a material effect on the Company's business; and (4) that as a result of the above, the defendants' positive statements about the growth and prospectus of SINA were lacking in any reasonable basis when made.
The complaint further alleges that on or around February 7, 2005, after the markets closed, SINA announced its financial results for the fourth quarter and full year ended December 31, 2004. The results and the Company's business outlook shocked the market. Shares of SINA fell $2.96 per share, or 10.82 percent, to close at $24.39 per share on unusually high trading volume.