China Sunergy Company Agrees to Settlement In Shareholder Class Action
October 2010 - If you purchased the publicly traded American Depository Shares of China Sunergy Co., Ltd. from May 17, 2007, through August 23, 2007, inclusive, pursuant and/or traceable to the Company’s May 17, 2007, IPO, you could get a payment from a class action settlement. The Settlement will provide a $1,050,000 cash Settlement Fund for the benefit of investors who bought shares of China Sunergy ADS pursuant or traceable (as defined above) to China Sunergy’s May 17, 2007, Initial Public Offering Prospectus and Registration Statement or on the open market from May 17, 2007, through August 23, 2007, inclusive, and held them until at least after August 24, 2007. The average per-share benefit to Class Members from this Settlement will be $0.11 before deduction of Court-approved fees and expenses. The Court will hold a Settlement Hearing on March 3, 2011, at 2:30 p.m., in New York, NY. At this hearing, the Court will consider whether the Settlement is fair, reasonable, and adequate. After the hearing, the Court will decide whether to approve the Settlement.
According to a press release dated September 10, 2007, China Sunergy, certain of its officers and directors, and the Company’s underwriters are charged with including, or allowing the inclusion of, materially false and misleading statements in the Registration Statement and Prospectus issued in connection with the IPO, in violation of the Securities Act of 1933.
Particularly, the Complaint charges that China Sunergy raised over $107.52 million through the issuance of 9.775 million shares, despite the Registration Statement’s false and misleading statements that the Company: (1) was a “leading manufacturer of solar cell products, as measured by production capacity” that was experiencing remarkable revenue growth; and (2) had secured a sufficient supply of polysilicon, a raw material necessary to the continued production of its solar cell products. Yet at the time of the IPO and unbeknownst to shareholders, the Registration Statement failed to disclose that China Sunergy was already having difficulty obtaining a sufficient supply of polysilicon, which foreseeably would have a near-term adverse impact on earnings.
On July 3, 2007, only weeks after the IPO, China Sunergy issued a press release announcing preliminary results for 2Q:07 well below guidance, and claimed that it could suddenly not obtain critical raw materials necessary for production and its revenue goals. The Company’s press release stated that “the relatively tight supply of polysilicon affected the quality, quantity and delivery of wafers and drove up overall wafer prices in the spot market, resulting in increased pressure on China Sunergy’s margins.”
The complaint further alleges that on this news, shares of China Sunergy fell nearly 25% in a single trading day, from a high of $14.90 on July 2, 2007, to a close of $11.28 the following day, on exceedingly high volume of 3.659 million shares. As the impact of China Sunergy’s belated disclosures resonated in the market, shares of the Company continued to decline, to about $7.50 per share by August 23, 2007. Shares fell significantly lower days later, to below $5.00 per share — on news that the Company’s CFO was resigning – after China Sunergy revealed a loss of at least $.14 per share for 2Q:07. In all, China Sunergy shares fell from $16.70 per share from the highs following the IPO, to a low of below $5.00 per share — all within approximately 10 weeks.