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Case ID: 3651 | Stocks | 04/14/2006
On September 15, 2005, the parties reached a tentative settlement in several class actions that had been filed against wireless interactive entertainment provider KongZhong Corporation (Nasdaq:KONG) and certain of its officers and directors by stockholders who purchased the company's American Depositary Shares (ADSs) between July 9, 2004, and August 17, 2004. The actions claimed 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 sought to recover compensatory damages for the loss of value of their stock.
The lawsuit alleged that the prospectus filed with the SEC in connection with the initial public offering of KongZhong common stock, which took place on July 9, 2004, was materially false and misleading. The prospectus, which forms part of the company's registration statement, became effective on July 9, 2004, and 10 million KongZhong ADSs were sold to the public, raising approximately $100 million for the company. Each ADS represented 40 ordinary shares. The prospectus was allegedly false and misleading because KongZhong failed to disclose and misrepresented the following adverse facts, among others, that: (1) in early June 2004 the company had carried inappropriate content on its interactive voice response (IVR) service, in violation of its agreement with China Mobile; (2) in response to the company’s violation of its agreements with China Mobile, it would be subject to sanctions that could impact or alter its business and profits; and (3) its relationship with China Mobile would be negatively impacted by the inappropriate content. On August 9, 2004, KongZhong issued a press release announcing its financial results for the second quarter of 2004 ending June 30, 2004. At that time, the company reported earnings of $0.19 per ADS. On August 18, 2004, KongZhong issued a second press release announcing that it had been notified by China Mobile of a sanction imposed on the company because of the inappropriate content. In addition to suspending the company’s new applications for new products, China Mobile also suspended the approval of the company’s applications, if any, to operate on new platforms until June 30, 2005. In response to this announcement, the price of KongZhong ADSs declined to $5.59 per ADS. The tentative settlement is not final until the Court approves it. No date has been for the court to grant finally approval. . At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest Several class actions have been filed against specialty finance company NovaStar Financial, Inc. (NYSE:NFI) and certain of its officers and directors by stockholders who purchased the company's common stock between October 29, 2003, and April 8, 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. A class action has been filed against Van der Moolen Holding N.V. (NYSE: VDM) and certain of its officers and directors by stockholders who purchased the company's American Depository Receipts (ADRs) between October 18, 2001, and October 15, 2003. The action claims 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 parties have reached a tentative $410 million settlement in several class actions filed against defense contractor Raytheon Company (NYSE:RTN) and certain of its officers and directors by stockholders who purchased the company's common stock between January 28, 1999, and October 12, 1999. The actions claimed 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. Persons eligible to take part in the action should contact attorneys for the class. A class action has been filed against NVE Corporation (NVEC), certain of its officers and directors by stockholders who purchased the company's common stock between May 22, 2003 and February 11, 2005. The action claims 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. A class action has been filed against Bombardier, Inc., and certain of its officers and directors by stockholders who purchased the company's common stock between Thursday, January 27, 2000 and Tuesday, May 06, 2003. The action claims 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. On June 27, 2008, the Court entered the Order signed by U.S. District Judge Gerard E. Lynch consolidating three actions under In re Société Générale Securities Litigation, case number 08cv2495.
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