According to a press release dated February 12, 2011, the Complaint alleges China Agritech issued materially false and misleading financial statements. Particularly, the Complaint alleges that on or about February 3, 2011, analyst firm LM Research issued a report (the “Report”) alleging, among other things, that the Company’s statement of revenue and earnings for the fiscal year 2009 are materially false and misleading. The Report, citing sources, claims that China Agritech’s U.S. financial statements were materially different than the financial statements filed with Chinese authorities by a number of the Company’s subsidiaries. The report claims that the revenue reported in the Company’s SEC filings for 2009 is ten times larger than what the Chinese regulatory reports show. The LM Research report also noted a number of potential badges of fraud within the Company. The Complaint alleges that when these disclosures of potential fraud concerning China Agritech were revealed to the market, the price of China Agritech stock dropped, damaging investors.
On May 16, 2011, Judge R. Gary Klausner denied the pending motions for consolidation and appointment of lead plaintiff and lead counsel. On June 22, 2011, an Amended Class Action Complaint was filed. The Amended Complaint named additional defendants in the action, expanded the alleged class period, and included additional claims. The defendants responded by filing several motions to dismiss on August 5, 2011.
According to the Minute Order signed by Judge R. Gary Klausner on October 27, 2011, in light of the foregoing, all of Plaintiff Yongs claims are dismissed. As to the remaining Plaintiffs, the Court orders the following: Defendants Agritechs and Individual Defendants Rule (12)(b)(6) Motions as to Plaintiffs First Claim are denied; Individual Defendants Rule (12)(b)(6) Motion as to Plaintiffs Second Claim are denied; Defendants Rule (12)(b)(1) Motions as to Plaintiffs Third Claim are denied; Defendants Rule (12)(b)(6) Motions as to Plaintiffs Third Claim are granted; and Individual Defendants (12)(b)(6) motions as to Plaintiffs Fourth Claim are granted.
On January 6, 2012, the plaintiffs filed a motion to certify the class.
On May 3, 2012, pursuant to civil minutes that were recorded in chambers regarding the Plaintiff’s Motion for Class Certification and Defendant’s Motion to Exclude the Expert Declaration, the Court denied both parties’ motions.
On September 20, 2012, the Court issued an Order granting dismissal of all claims with prejudice following a stipulation of the parties.