According to a press release dated January 5, 2011, the complaint charges the defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Camelot is a holding company that conducts business through its operating subsidiaries in China. The Company is a provider of enterprise application services and financial industry information technology services in China.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business practices and financial results. Specifically, defendants failed to disclose negative trends in the Company’s business, including with its most important customers. As a result of defendants’ false statements, the Company’s ADSs traded at artificially inflated prices during the Class Period, reaching a high of $26.73 per share on January 11, 2011.
On July 21, 2010, the Company announced the pricing of its IPO of 13.3 million ADSs at $11.00 per ADS. Subsequently, on December 9, 2010, it announced the pricing of its Secondary Offering of 7,160,206 ADSs by selling shareholders at $19.50 per ADS. The complaint alleges that the Registration Statements issued in connection with the Offerings were inaccurate and misleading and omitted to state material facts required to be stated therein.
On August 15, 2011, a reporting organization published an article questioning several key components of the Company’s business. This caused the ADSs to drop to below $9 per share. Then on August 18, 2011, the Company issued a press release announcing its second quarter 2011 unaudited financial results, including lower-than-expected guidance for fiscal 2011. On this news, the Company’s ADSs dropped $2.24 per share to close at $6.32 per share on August 18, 2011, a one-day decline of 26%.
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) the Company’s IT professionals were not a competitive advantage to the Company and many were dissatisfied with Camelot, which would adversely affect the Company’s ability to retain its customers; (b) the Company was suffering from undisclosed attrition of employees, which was having a negative impact on the Company’s ability to attract new customers; (c) Camelot did not have the large numbers of highly trained professionals at its disposal that it had represented; and (d) the Company’s contract with its most important customer was not as solid as represented, and would not be renewed on the same terms.
On June 6, 2012, the Court issued an Order appointing lead plaintiffs and approving the selection of lead counsel.
On September 6, 2012, the Plaintiffs filed an amended class action complaint. On October 1, 2012, the Plaintiffs filed a corrected complaint.
On October 10, 2012, the Court issued an Order consolidating cases.
On March 19, 2014, the parties entered into a Settlement Agreement. This Settlement was preliminarily approved by the Court on December 12, 2014. The Court granted final approval of the Settlement and ordered this case dismissed on July 1, 2015.