Stockholders v The9, Ltd.
Stockholders File Lawsuit Against The9, Ltd.
According to a press release dated October 21, 2009, the complaint charges The9 and certain directors and officers of The9 with violations of the Exchange Act. The9 is an online game operator and developer in China. According to the complaint, during the Class Period, the Company, directly and through its affiliates and/or subsidiaries, operated licensed massively multiplayer online role-playing games (MMORPGs) and advanced casual games in China, including World of Warcraft (WoW), Soul of The Ultimate Nation, Granado Espada, EA SPORTS FIFA Online 2, and Atlantica. It also operated other licensed games in mainland China, including Audition 2 and Field of Honor.
The complaint alleges that, throughout the Class Period, defendants made numerous positive statements regarding the Companys financial condition, business and prospects. The complaint further alleges that these statements were inaccurate statements of material fact when made because defendants failed to disclose that: (i) it was becoming increasingly less likely that the Company would be renewing the WoW contract with Blizzard; (ii) The9 had not even begun formal negotiations with Blizzard regarding the contract renewal; (iii) The9 and Blizzard had been at odds regarding The9s operation of WoW in China; and (iv) the equity investment by EA in The9 had made it less likely that Blizzard would renew the WoW contract because Blizzard would essentially be doing business with one of its greatest competitors.
On July 15, 2009, The9 reported a $36.9 million or 72% reduction in net income for 2008 from $51.1 million in net income that it had reported for that period on February 23, 2009. Moreover, The9 admitted that it had not even begun negotiations with Blizzard concerning the renewal of the WoW contract as of the date that it had previously represented to investors. In response to this news, shares of The9s stock dropped 18% to $8.34.
If you bought The9, Ltd. securities and would like to obtain information about the The9, Ltd. lawsuit, then you are invited to call Kahn Swick & Foti, LLC toll free at (866) 467-1400 extension 100 to speak with an attorney or visit www.ksfcounsel.com.
