Several class actions have been filed against certain officers and directors of Chinese insurance company China Life Insurance Company Limited (NYSE: LFC) by stockholders who purchased the company's common stock between December 22, 2003, and February 3, 2004. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

According to the complaint, China Life has existed in its current form since June 2003, when it was formed to cherry-pick healthier policies from its parent company, China Life Insurance Company. Following the company’s road show in New York just prior to the initial public offering, China Life’s IPO was about 25 times oversubscribed and triggered the sort of frenzy that was reminiscent of the Internet bubble. The IPO was priced at $18.68 on December 16, 2003.

The action alleges that during the class period, the defendants knew, but failed to disclose the following adverse facts: (1) that the company, under its old name, engaged in a massive financial fraud to the tune of $652 million; (2) that at the time of the IPO, the National Audit Office of China (NAO) had completed and was soon to publish its adverse audit findings regarding the predecessor company which, under a new name, controls the listed company, China Life; (3) that the predecessor company, under a different name, engaged in criminal acts involving illegal agent services, illegal premium payments, embezzlement and depositing monies in illegal bank accounts; and (4) that China Life’s share price would be tied to the illegal acts already known to the defendants, two-thirds of whom were directors, executive officers, or senior managers of the predecessor company.

As a result of the defendants’ allegedly false statements, China Life’s stock price traded at inflated levels during the applicable period, increasing to as high as $34.75 on December 29, 2003, shortly after the company sold more than $3 billion worth of its own shares. On February 4, 2004, China’s state audit office said on its Website that it had found the equivalent of about $652 million worth of irregularities involving China Life’s predecessor company and parent company. In a statement on the NAO Web site, Li Jinhua, head of the NAO, was quoted as saying that in its national audit last year, the office found irregularities at China Life Insurance Company, including 2.4 billion yuan involving illegal agent services and premium payments, 2.5 billion yuan in embezzled funds and 31.79 million yuan deposited in illegal bank accounts (the equivalent of $652 million).

If you purchased the securities issued by China Life Insurance Company Limited, during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by May 17, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.