According to a press release dated April 15, 2011, the Complaint asserts violations of the federal securities laws against Subaye and its officers and directors for issuing materially false and misleading financial statements to investors. On April 7, 2011 the Company disclosed its auditor, PricewaterhouseCoopers Hong Kong (“PwC”) resigned. PwC identified matters that may materially impact the fairness and reliability of Subaye’s quarterly financial information for the three months ended December 31, 2010 and may cause PwC to be unwilling to rely on managements’ representations.
PwC’s was unable to obtain information and supporting documentation to verify: (a) cash settlements from sales agents to Subaye, (b) the end customer subscriptions for the Company’s services and the services rendered to the end customers, (c) marketing and promotion activities performed by sales agents in return for fees paid to such agents and recorded as expenses of the Company. PwC also stated that Subaye provided insufficient explanations regarding commonalities between certain customers and vendors. Lastly, PwC could find no evidence of any business tax payments by the Company for services rendered in China.
Since April 7, 2011 trading in the Company’s stock has been halted, rendering the Company’s stock illiquid and causing investors further damage.
On September 16, 2011, the Court issued an Order appointing one of two competing Plaintiffs as Lead Plaintiff and approving of Lead Counsel.
On December 1, 2011, the Court issued an Order dismissing this action without prejudice pursuant to Fed. R. Civ. P. 41(a)(1).