According to a press release dated March 6, 2011, the Complaint alleges that on March 11, 2011, after the close of trading, Fushi Copperweld shocked the market when it disclosed a press release that stated, among other things, that "(t)he Company . . . is currently reevaluating the application of generally accepted accounting principles ("GAAP") in certain accounting treatments applied to its 2007, 2008, and 2009 financial results as well as its previously filed quarterly financial statements for the first three quarters of 2010. These accounting treatments are related to the ability to realize deferred income tax assets, qualification of cash flow hedge for cross-currency interest swap, and bargain purchase gains recognized in 2010 acquisitions."
On September 20, 2011, the Plaintiffs entered filed a Stipulation of Voluntary Dismissal without prejudice.
The Complaint further alleges that on March 14, 2011, the first trading day following these disclosures, the price of Fushi Copperweld's common stock declined by $0.74 per share, nearly 8%, to close at $8.68 per share on heavier than usual volume. The Company's common stock price declined by an additional $0.94 per share, or 10.8%, over the next two days to close at $7.74 per share on March 16, 2011.
Then, on March 29, 2011, after the market closed, Fushi Copperweld further disclosed that "the Company's previously issued financial statements for the years ended December 31, 2009, 2008 and 2007, and its unaudited interim financial statements for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010 (collectively, the "Previously Issued Financial Statements") should no longer be relied upon and should be restated, due to two errors in the application of U.S. Generally Accepted Accounting Principles ("US GAAP") regarding (1) the accounting for cross-currency interest swap derivative and (2) the acquisitions of Dalian Jinchuan Electric Cable Co., Ltd. ("Jinchuan") and Shanghai Hongtai Industrial Co., Ltd. ("Hongtai")."
The Complaint further alleges that on March 30, 2011, as a result of the further disclosures on March 29, 2011, Fushi Copperweld's common stock declined by $0.19 per share, 2.3%, to close at $8.12 per share, on heavier than usual volume.
On September 20, 2011, the Plaintiff filed a Stipulation for Voluntary Dismissal without prejudice. A related action continues in the Middle District of Tennessee under 11-CV-00595.
The parties entered into a Stipulation of Settlement on August 29, 2013. Preliminary approval was granted on September 4, 2013. Final approval was granted on May 12, 2014.