According to the Complaint, this action arises from a fraudulent scheme in which Puda insiders improperly transferred the Company's only revenue-producing, operating subsidiary to CITIC and then, with the assistance of CITIC, falsely portrayed to investors in Puda that the Company still possessed its operating subsidiary.
The Complaint alleges that in both its February 2010 and December 2010 public stock offerings, Puda represented to investors that it was a Delaware holding company, with substantially all of its operations conducted through its sole operating subsidiary, Shanxi Puda Coal Group Co., Ltd. ("Shanxi Coal"), which Puda indirectly owned through its ownership interests in two intermediary companies. Shanxi Coal owned all of Puda's mining assets and coal washing plants - and thus its cash and receivables. Shanxi Coal's operations were the sole source of Puda's revenues and profits. Because Puda owned 90% of Shanxi Coal, Puda was permitted to consolidate Shanxi Coal's operating results with its own in financial statements filed with the Securities and Exchange Commission ("SEC") and presented to investors.
On March 11, 2014, the Court issued an Order granting defendant's motion to dismiss and terminating this action.
On April 7, 2014, the Court issued an Order granting a party's motion to intervene as a party plaintiff.