According to a press release dated October 21, 2009, the complaint charges The9 and certain directors and officers of The9 with violations of the Exchange Act. The9 is an online game operator and developer in China. According to the complaint, during the Class Period, the Company, directly and through its affiliates and/or subsidiaries, operated licensed massively multiplayer online role-playing games (“MMORPGs”) and advanced casual games in China, including World of Warcraft (“WoW”), Soul of The Ultimate Nation, Granado Espada, EA SPORTS FIFA Online 2, and Atlantica. It also operated other licensed games in mainland China, including Audition 2 and Field of Honor.
The complaint alleges that, throughout the Class Period, defendants made numerous positive statements regarding the Company’s financial condition, business and prospects. The complaint further alleges that these statements were inaccurate statements of material fact when made because defendants failed to disclose that: (i) it was becoming increasingly less likely that the Company would be renewing the WoW contract with Blizzard; (ii) The9 had not even begun formal negotiations with Blizzard regarding the contract renewal; (iii) The9 and Blizzard had been at odds regarding The9’s operation of WoW in China; and (iv) the equity investment by EA in The9 had made it less likely that Blizzard would renew the WoW contract because Blizzard would essentially be doing business with one of its greatest competitors.
On July 15, 2009, The9 reported a $36.9 million – or 72% – reduction in net income for 2008 from $51.1 million in net income that it had reported for that period on February 23, 2009. Moreover, The9 admitted that it had not even begun negotiations with Blizzard concerning the renewal of the WoW contract as of the date that it had previously represented to investors. In response to this news, shares of The9’s stock dropped 18% to $8.34.
On December 21, 2009, an amended class action was filed in this case by the plaintiffs against the defendants.
On February 02, 2010, a stipulation and order consolidating actions, appointing lead plaintiffs and approving lead plaintiffs' selection of lead counsel was granted by the court.
On March 19, 2010, a consolidated complaint was filed by the lead plaintiffs against the defendants.
On May 28, 2010, the defendants filed a motion to dismiss the Consolidated Complaint. On March 28, 2011, Judge Richard J. Holwell signed the Memorandum Opinion and order granting the defendants' motion to dismiss in its entirety. The Clerk of the Court is directed to close this case. On March 30, 2011, the Clerk's Judgment was entered the case is now closed.
On May 12, 2011, a Stipulation of Dismissal of Action with Prejudice was agreed upon by all parties of record. By and through their respective counsel to the above-captioned action, each claim for relief asserted therein, was dismissed with prejudice, each side to bear its own costs of suit.
The Stipulation of Dismissal of Action with Prejudice was entered on May 20, 2011. According to the Stipulation signed by Judge Richard J. Holwell, this action, and each claims for relief asserted therein, shall be and hereby is dismissed with prejudice, each side to bear its own costs of suit.