China Medicine Corporation (OTC: CHME) Investor Securities Class Action Lawsuit 07/15/2011

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Company Name(s): 
China Medicine
Case Name: 
China Medicine Shareholder Class Action Lawsuit 07/15/2011
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
OTC: CHME
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
07/15/2011
Class Period Begin: 
02/08/2006
Class Period End: 
01/31/2013
Court of Filing: 
U.S. District Court for the Central District of California
Deadline To File for Lead: 
09/16/2011
Date Settled: 
05/16/2013
Settlement Amount: 
$700,000
Deadline to Participate in Settlement: 
09/27/2013
Summary: 

January 7, 2014 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorney's fees and expenses and dismissed the action with prejudice.

May 16, 2013 - The court preliminarily approved the settlement.

May 3, 2013 - Parties filed a first amended stipulation of settlement.

January 31, 2013 - Parties filed a stipulation of settlement.

May 10, 2012 - The court denied defendants' motion to dismiss.

February 17, 2012 - Defendants filed a motion to dismiss.

December 20, 2011 - The lead plaintiff filed an amended consolidated complaint on behalf of investors who purchased China Medicine Corporation (OTC: CHME) common shares between December 4, 2006 and March 23, 2011. The plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between December 4, 2006 and March 23, 2011.

October 21, 2011 - Lead plaintiff and lead counsel were appointed and all cases were consolidated.

September 16, 2011 - Lead plaintiff motion was filed.

July 15, 2011 - An investor in shares of China Medicine Corporation (OTC: CHME) filed a lawsuit in the U.S. District Court for the Central District of California against China Medicine Corporation over alleged Violations of Federal Securities Laws.

According to the complaint the plaintiff alleges on behalf of investors who purchased China Medicine Corporation (OTC: CHME) between November 30, 2006 and March 23, 2011, that China Medicine Corporation and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing materially false and misleading statements regarding its business and financial results.

China Medicine Corporation reported to the U.S. regulator an increase in its annual Total Revenue from $23.99 million for 2006 to $64.75 million for 2009. On the other hand its Net Income decreased from $9.13 million in 2008 to $1.72 million in 2009. For the first three quarters in 2010 China Medicine Corporation reported a combined nine months Total Revenue of $45.31 million with a combined nine months Net Income of $8.12 million.

On February 22, 2011, China Medicine Corporation issued a press release announcing that Frazer, LLP, its accountant, would be declining to stand for reappointment. On the news, China Medicine Corporation's stock lost more than 40% of its value from February 23, 2010 to March 23, 2011.

Then on March 23, 2011, China Medicine Corporation filed a Form with the U.S. Securities and Exchange Commission ("SEC") announcing that its board of directors had concluded that China Medicine Corporation's financial statements filed with the SEC for the 2008 and 2009 fiscal years and the quarterly reports during the fiscals years 2008, 2009 and 2010 were unreliable. China Medicine Corporation also announced that certain accounting and reporting errors were identified with respect to improper activities by certain employees at its subsidiaries Guangzhou LifeTech Pharmaceutical Co., Ltd.

On the next trading day, China Medicine Corporation's (OTC: CHME) stock drooped by over 53% from $1.16 per share on March 23, 2011 to $0.54 per share on March 24, 2011.

On July 1, 2011, China Medicine Corporation announced in a filing with the SEC that its Board of Directors concluded that its previously issued financial statements contained in its Annual Report on Form 10-K for the fiscal years ended December 31, 2006 and 2007, and the Quarterly Reports on Form 10-Q for the periods within the fiscal years 2006 and 2007 should no longer be relied upon.

Shares of China Medicine Corporation (OTC: CHME) closed on July 18, 2011 at $0.80 per share.