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Case Status:    SETTLED
On or around 08/03/2011 (Settlement preliminarily approval)

Filing Date: November 26, 2007

The original class action was commenced on behalf of purchasers of Giant Interactive Group, Inc. American Depositary Shares pursuant and/or traceable to the Company’s initial public offering on or about November 1, 2007 through November 19, 2007.

The complaint charges Giant Interactive and certain of its officers and directors with violations of the Securities Act of 1933. Giant Interactive develops and operates online games in the People's Republic of China. The Company’s primary game is ZT Online which is a free-to-play massive multi-player online game.

According to the complaint, on or about October 31, 2007, Giant Interactive filed with the Securities and Exchange Commission a Form F-1/A Registration Statement, for the IPO. On or about November 1, 2007, the Prospectus with respect to the IPO, which forms part of the Registration Statement, became effective and, including the exercise of the over-allotment, more than 57 million shares of Giant Interactive’s ADSs at $15.50 per ADS were sold to the public, thereby raising more than $886 million. The complaint alleges that the Registration Statement and the Prospectus failed to disclose that the Company had experienced a decline in average concurrent users (“ACU”) and peak concurrent users (“PCU”) for the third quarter of 2007 due to a significant rule change for ZT Online.

On November 19, 2007, after the close of the market, Giant Interactive issued a press release announcing its financial results for the third quarter of 2007, the period ending September 30, 2007. Among other things, the Company reported that ACU for the third quarter was 481,000, a decrease of 6% from the second quarter of 2007 and that PCU for the third quarter was 888,000, a decrease of 17.2% from the second quarter of 2007. Then, on November 20, 2007, before the market opened, Giant Interactive held a conference call with analysts and investors to review the Company’s earnings release. During the conference call, Giant Interactive attributed the decline in the third quarter ACU and PCU figures to a rule change to ZT Online that was implemented to discourage gold farming activity. Following the Company’s earnings release and conference call, on November 20, 2007, the price of Giant Interactive ADSs dropped from $14.88 per ADS to $11.10 per ADS on extremely heavy trading volume.

As summarized by the Company’s FORM 20-F for the fiscal year ended December 31, 2008, on November 26 and December 20, 2007, Pyramid Holdings, Inc. and Rosie L. Brooks, respectively, filed a class action against us in the United States District Court, Southern District of New York, for alleged violations of federal securities laws with our initial public offering. On July 30, 2008, the Court consolidated these actions into one class action and appointed a group of individual shareholders made up of Dunping Qui, Xie Yong, Linming Shi, and Arthur Michael Gray (the “Qui Group”) and their counsel as lead plaintiffs and lead plaintiffs’ counsel, respectively, under the Private Securities Litigation Reform Act. On October 6, 2008, the Qui Group filed a consolidated amended complaint (the “Complaint”) asserting claims for violations of Sections 11 and 12(a)(2) of the Securities Act of 1933. The Complaint alleges that plaintiffs purchased American Depositary Shares issued pursuant to or traceable to our initial public offering and that the registration statement and prospectus for that offering contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the applicable rules and regulations. Specifically, the Complaint alleges that prior to our initial public offering, we implemented a rule change to discourage “gold farming activities” in ZT Online. Gold farming occurs when companies hire individuals to play the game to generate online currency that is sold on third party websites for cash. According to the Complaint, this rule change caused a decline in average concurrent users (“ACU”) and peak concurrent users (“PCU”) and that the registration statement and prospectus in connection with our initial public offering failed adequately to disclose these declines. The Complaint seeks a declaration that action is a proper class action; damages to class members with interest; that the initial public offering be rescinded; litigation costs and expenses, including attorneys’ fees, accountants’ fees, and experts’ fees. We filed a motion to dismiss the Complaint for failure to state a claim on November 21, 2008. This motion has been fully briefed and was deemed submitted to the Court for decision as of February 25, 2009. The Court has not scheduled a hearing on our motion to dismiss.

COMPANY INFORMATION:

Sector: Technology
Industry: Software & Programming
Headquarters: China

SECURITIES INFORMATION:

Ticker Symbol: GA
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


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COURT: S.D. New York
DOCKET #: 07-CV-10588
JUDGE: Hon. Robert W. Sweet
DATE FILED: 11/26/2007
CLASS PERIOD START: 11/01/2007
CLASS PERIOD END: 11/19/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abraham, Fruchter & Twersky (New York, One Pennsylvania Plaza)
    One Pennsylvania Plaza, Suite 1910, Abraham, Fruchter & Twersky (New York, One Pennsylvania Plaza), NY 10119
    212.279.5050 212.279.3655 · JFruchter@FruchterTwersky.com
  2. Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    200 Broadhollow, Suite 406, Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 · info@csgrr.com/
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 07-CV-10588
JUDGE: Hon. Robert W. Sweet
DATE FILED: 10/06/2008
CLASS PERIOD START: 11/01/2007
CLASS PERIOD END: 11/19/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abraham, Fruchter & Twersky (New York, One Pennsylvania Plaza)
    One Pennsylvania Plaza, Suite 1910, Abraham, Fruchter & Twersky (New York, One Pennsylvania Plaza), NY 10119
    212.279.5050 212.279.3655 · JFruchter@FruchterTwersky.com
  2. Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    58 South Service Road, Suite 200, Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 · info@csgrr.com/
No Document Title Filing Date