According to a press release dated September 9, 2011, the Defendants violated federal securities laws in connection with statements released to the public around the Company’s initial public offering.
At the time of the IPO, the Company derived substantially all of its revenues from sales to the WiMAX segment of the 4G market. On or about April 14, 2011, the Prospectus with respect to the IPO, which forms part of the Registration Statement, became effective and 7.7 million shares of the Defendant’s ADSs were sold to the public at $10 per ADS.
The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, defendants allegedly misrepresented and/or failed to disclose the following adverse facts: (a) revenues from the Company’s WiMAX products were declining; (b) the Company was not in position to generate any meaningful revenues from sales of 4G LTE products until late 2012; (c) the Company’s largest customer, and the industry in general, was focusing more on 4G LTE offerings as opposed to WiMAX offerings, including WiMAX products offered by the Company; (d) the Company would not experience sales growth during 2011 and in fact would experience sales declines during that period; (e) the Company was becoming increasingly more dependent upon sales from its largest customer, and sales from that customer had declined and would continue to decline; and (f) as a result of the foregoing, defendants’ positive statements about the Company were lacking in a reasonable basis of fact and were materially false and misleading when made.
On July 28, 2011, before the market opened, the Company announced financial results for the second quarter of 2011, the period ended June 30, 2011, and reported net profit of $0.1 million, or $0.00 per diluted ADS, compared to a net profit of $1.9 million, or $0.07 per ADS, in the first quarter of 2011 and a net profit of $0.6 million, or $0.02 per ADS, in the second quarter of 2010.
At the time of the filing of the complaint, the Company’s ADSs were trading in the range of $5.50-$6.00 per share.
On December 13, 2011, the Court issued an Order appointing lead plaintiffs and approving the selection of lead counsel. On February 1, 2012, the Lead Plaintiffs filed their consolidated and amended complaint.
On January 17, 2013, the Court issued an Order granting the motions by the Company Defendants and the Underwriter Defendants to dismiss Plaintiffs' Consolidated Amended Complaint. Plaintiffs were given 20 days to file a motion for leave to amend and a proposed amended complaint.
On October 31, 2013, the parties entered into a Settlement Agreement. This Settlement was preliminarily approved by the Court on November 20th.