Rather than filing a motion to dismiss, defendants answered the Amended Complaint on December 11, 2006. Discovery continued throughout 2007 and much of 2008 when defendants filed a Stipulation of Dismissal on August 26. The judge dismissed the case in its entirety and with prejudice on September 17, 2008.
On March 10, 2006, the Court entered the Memorandum Opinion and Order granting the Green Group’s motion for order for appointment as Lead Plantiff and for approval of selection of Co-Lead and Liaison Counsels. On October 27, 2006, a First Amended Class Action Complaint was filed.
The original class action lawsuit was filed against CDC and its chief executive officer with violations of Securities 10(b) and 20(a) of the Securities and Exchange Act, as well as state securities laws.
Specifically, the complaint alleges that CDC issued false press releases describing CDC as a profitable manufacturer of custom compressor systems using proprietary designs that enabled marginally producing natural gas wells to extract and distribute gas. In reality, CDC owned few assets and its repeated claims of revenue streams, lucrative contracts with major producers, and unique compressor technologies were gross exaggerations of CDC's actual business operations. CDC’s chief executive condoned the further distribution of CDC's false press releases through spam emails and broadcast faxes.
The complaint further alleges that on or around February 28, 2005, the Company announced that the SEC had filed a complaint charging the Company with securities law violations.