According to a press release dated July 5, 2011, the defendants issued materially false and misleading statements regarding the company’s business and financial results. As a result of defendants’ false statements, shares traded at artificially inflated prices during the Class Period, reaching a high of $20.55 per share on December 22, 2009.
On June 17, 2011, Seeking Alpha published an article stating, among other things, that the defendant had a history of internal weaknesses over financial controls, which had resulted in an adverse opinion from the defendant’s independent auditor, and that the company’s filings with the State Administration for Industry and Commerce showed that A-Power was reporting significantly lower revenue and profit to the authorities in China than it was reporting in its filings with the SEC.
Then, on June 27, 2011, the defendant issued a press release announcing that MSCM LLP, the company’s auditor, had resigned, stating MSCM’s resignation was due to the company’s non-retention of a qualified independent forensic accounting firm to evaluate “certain business transactions that MSCM stated was necessary for MSCM to complete its audit of the Company’s financial statements for the year ended December 31, 2010 on a timely basis.” Moreover, the company acknowledged that it would be delayed in filing its Form 20-F for the fiscal year ending December 31, 2010, due in part to MSCM’s resignation. On this news, after the market closed, NASDAQ halted trading of the defendant’s stock at $1.67 per share.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) defendant improperly accounted for its related-party transactions such that its financial statements were presented in violation of Generally Accepted Accounting Principles (“GAAP”); and (b) the defendant’s revenues and income were misstated in violation of GAAP.
A similar, purported class action complaint has also been filed in the U.S. District Court for the Central District of California.
On December 16, 2011, the panel on multi-district litigation issued an Order consolidating four cases in the Central District Court of California under docket number 11-CV-10395.
On January 9, 2012, the Court issued an Order consolidating cases under MDL 11-2302, appointing lead plaintiff, and approving the selection of lead counsel. On March 1, the lead plaintiff filed a consolidated complaint.
On May 31, 2012, the Court issued an Order granting defendants' motions to dismiss with leave to amend. On July 16, 2012, the plaintiffs filed their consolidated and amended complaint.
On December 7, 2012, a Notice of Motion and Motion for Settlement Approval Lead Plaintiff's Notice of Motion and Motion for Preliminary Approval of Proposed Settlement; and Memorandum of Points and Authorities in Support A Power Investor Group with an accompanying stipulation for settlement.
On January 9, 2013, an Amended Notice of Motion and Motion for Settlement Approval Lead Plaintiff's Notice of Motion and Motion for Preliminary Approval of Proposed Settlement; and Memorandum of Points and Authorities in Support A Power Investor Group with an accompanying stipulation for settlement were filed with the Court.
On August 22, 2013, the Court issued an Order and Final Judgment approving the Settlement and dismissing this case with prejudice.
On August 29, 2013, the Court issued an Order awarding attorneys' fees and expenses.