RINO International Corporation Investor Files Lawsuit Alleging Securities Laws Violations
May 21, 2012 (Update) -- Proposed $7,000,000 settlement. According to the Notice:
Statement of Plaintiff Recovery: This Notice relates to a proposed settlement (the “Settlement”) of claims asserted in a class action lawsuit against RINO International Corporation (“RINO” or the “Company”), Kennith C. Johnson and Weiguo Zhang (collectively, “Defendants”), and additional Individual Defendants Dejun Zou, Jianping Qiu, Yi Jenny Liu, Ben Wang, Xie Quan, and Li Yu (together with Kennith C. Johnson and Weiguo Zhang, the “Individual Defendants”). The total value of the Settlement is $7,000,000 (seven million dollars) in cash, plus interest earned from the time of funding of the Settlement through the time of distribution to Class Members. In particular, the Settlement will create a Settlement Fund to pay claims of investors who purchased the common stock or call options of RINO, or sold put options of RINO, between March 31, 2009, and November 17, 2010, inclusive, and who have been damaged thereby. The Net Settlement Fund (the Settlement Fund less any attorneys’ fees, award to Lead Plaintiff, expert and consultant fees, taxes, and other costs and expenses approved by the Court) will be distributed in accordance with a plan of allocation (the “Plan of Allocation”). Lead Plaintiff’s damages expert estimates that approximately 10.7 million shares of the Company were traded during the Class Period, which may have been damaged as a result of the allegedly wrongful conduct. Thus, assuming that the owners of all affected shares elect to participate, the average per share recovery from the Settlement Fund would be approximately $0.65 per damaged share. Option traders should review the Plan of Allocation, set out below, for their personal recovery.
Reasons for the Settlement: The Settlement resolves claims against the Defendants and Individual Defendants alleging that they violated federal securities laws by making allegedly false and misleading public statements. However, the Settlement should not be construed as an admission of wrongdoing by the Defendants or any of the Released Parties. In light of the amount of the Settlement and the immediacy of recovery to the Class, Lead Plaintiff believes that the proposed Settlement is fair, reasonable and adequate, and in the best interests of the Class. Lead Plaintiff believes that the Settlement provides a substantial benefit, namely $7,000,000 (seven million dollars) in cash, plus interest earned from the time of the funding of the Settlement through the time of distribution to Class Members (less the various deductions described in this Notice), as compared to the risk that all or some of the claims in this Action could have been dismissed in response to Defendants’ pending motions to dismiss, or that a similar, smaller, or no recovery might have been achieved after a trial and appeals, possibly years in the future, during which the Defendants would have had the opportunity to assert substantial defenses to the claims asserted against them.
November 15, 2010 -- An investor in RINO Intl. shares filed a lawsuit in the U.S. District Court for the Central District of California against RINO International Corporation over alleged violations of Federal Securities Laws.
According to the complaint the plaintiff alleges on behalf of investors who purchased the common stock of RINO International Corporation (Nasdaq: RINO) during the period from March 31, 2009 to November 11, 2010, that RINO International Corporation and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by misrepresenting March 31, 2009 and November 11, 2010 RINO International’s true financial performance.
RINO Intl’s 12month Total Revenue went from $10.76million in 2006 to $192.64million in 2009. Its Net Income went from $3.15million in 2006 to $56.39million in 2009. For the first two quarters in 2010 RINO International Corp reported $47.86million, respectively $65.38million in quarterly Total Revenue with $20.44million, respectively $18.66million Net Income.
Shares of RINO International Corporation (Public, NASDAQ:RINO) traded in 2009 as high as $32.35 per share. In 2010 RINO shares began to lose value and traded in May at $11.87 per share or 65% below its 2009 high. Over the past 6months RINO shares were able to regain some value and traded on October 27 at $19.20 per share.
Then on November 10 a research report questioned RINO International‘s customer relationships and the accuracy of the financial results of RINO International Corp's financial statements.
The plaintiff alleges that contrary to RINO International‘s annual report filed with the SEC for fiscal 2009 which reported $193 million of revenue, the Company’s annual report filed with the Chinese authorities reported only $11 million of revenue for 2009. This discrepancy, along with other accounting inconsistencies, and questionable transactions between RINO International Corp and its management, has raised red flags and prompted an internal review, so the plaintiff. The Complaint asserts that when the market learned of this adverse information, the price of RINO stock dropped damaging investors.
Shares of RINO International Corporation (NASDAQ:RINO) fell from $16.27 on November 9 to $10.57 per share on November 11.