On September 18, 2010, the Complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against China-Biotics and certain of its present and former officers and directors for making material misstatements and omissions about the Company’s true financial condition.
According to the Complaint, during the Class Period Defendants misled investors about the quality, nature, and quantity of China-Biotics’ purported retail outlets and stores. The Complaint also alleges that China-Biotics’ fiscal 2008 financial statements filed with the SEC are materially false because the Company’s fiscal 2008 financial statements filed with Chinese authorities reported merely a fraction of the cash, revenue and income set forth in the Company’s 2008 financial statements with the SEC.
The Complaint asserts that when this adverse information began to enter the market, the price of China-Biotics securities dropped, damaging investors.
A similar, purported class action complaint has also been filed in the U.S. District Court for the Southern District of New York. On December 16, 2010, the plaintiff in the California case voluntarily dismissed the action. The case against China-Biotics, Inc. is now pending in New York (Hill v. China-Biotics, Inc., et al. No. 10-cv-7838).
On April 25, 2011, an Amended Complaint was filed, adding certain directors and two company underwriters as defendants named in the action. The defendants responded by filing a motion to dismiss the Amended Complaint on August 18, 2011.
According to the Order entered on December 14, 2011, Plaintiffs' claims under Section 11 of the Securities Act of 1933, against Defendants China-Biotics, Inc., the Officer and Director Defendants, Roth Capital Partners LLC, and Maxim Group LLC, are dismissed for lack of standing. Plaintiffs may have leave to replead their Section 11 claim. Any amended pleading shall be filed by January 9, 2012. Leave is granted without prejudice to any statute of limitations arguments Defendants may wish to make.
On January 9, 2012, Plaintiffs filed their Second Amended Complaint.
On October 18, 2012, the Court issued an Order consolidating cases. The Clerk of the Court was directed to designate 10 Civ. 7838 (PAC) as the lead case and to terminate 12 Civ. 4202.
On November 19, 2013, a Stipulation was filed dismissing certain defendants from this case.