Tongxin International Ltd Faces Lawsuit By Investors Over Alleged Securities Laws Violations
July 23, 2012 (Update) -- Court approved $3 million settlement in Tongxin International shareholder class action for those who purchased Tongxin common stock between May 18, 2009 and December 17, 2010, inclusive.
May 3, 2012 (Update) -- Proposed $3 million settlement in Tongxin International shareholder class action.
According to the Notice:
Securities and Time Period: Tongxin common stock (ISIN: VGG8918T1030) purchased between May 18, 2009 and December 17, 2010, inclusive.
Settlement Fund: $3,000,000 in cash. Your recovery will depend on the number of shares of Tongxin common stock purchased between May 18, 2009 and December 17, 2010, inclusive, and the timing of your purchases and any sales. If claims are submitted for 100% of the eligible shares of Tongxin common stock, the estimated average recovery per share of common stock will be approximately $0.185 before deduction of Court-approved fees and expenses. The actual amount per share you could receive will depend on a number of factors which are explained in the Plan of Allocation contained in Question
Settlement Class: The Court has conditionally certified a Settlement Class of all purchasers of Tongxin common stock during the period between May 18, 2009 and December 17, 2010, inclusive, and who were allegedly damaged thereby. Excluded from the Settlement Class are Defendants; any entity in which any Defendant has or had a controlling interest or that is a parent or subsidiary or is controlled by any Defendant; Defendants’ officers and directors, including any person who was an officer or director during the Settlement Class Period; Defendants’ affiliates, legal representatives, heirs, predecessors, successors or assigns; and members of the Individual Defendants’ immediate families. Also excluded from the Settlement Class are those Persons who timely and validly request exclusion from the Settlement Class pursuant to this Notice.
Reasons for Settlement: Avoids the costs and risks associated with continued litigation, including the danger of no recovery, and provides a benefit to the Settlement Class now.
January 3, 2011 -- An investor in Tongxin International Ltd (Public, PINK:TXIC) filed a lawsuit for certain TXIC shareholders in the United States District Court for the Central District of California against Tongxin Intl. and certain of its officers and directors. The plaintiff Tongxin and certain of its officers and directors violated Federal Securities Laws.
According to the complaint the plaintiff alleges on behalf of purchasers of Tongxin International Ltd. (PINKSHEETS:TXIC) common stock during the period between May 15, 2009 and December 14, 2010 that Tongxin Intl. and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between May 15, 2009 and December 14, 2010 materially false and misleading statements regarding Tongxin International’s business and financial results. While Tongxin Intl’s 12 months Total Revenue went from $66.61million in 2006 to $121.63million in 2009, its Net Income on the other hand went from $5.70million in 2006 to a Net Loss of $13.27million in 2009. On June 30, 2010, Tongxin announced that it would delay filing its Form 20-F for the fiscal year ending December 31, 2009. On October 12, 2010, Tongxin announced that NASDAQ would delist Tongxin International’s stock due to its failure to timely file its Form 20-F and acknowledged that a report issued by KPMG, the forensic accountants hired by Tongxin International’s Audit Committee, concluded that the documentary support for certain of its related-party transactions was contradictory, insufficient and lacking in substantive detail and/or accuracy, thus calling into question the validity of the transactions. The plaintiff alleges that defendants improperly accounted for Tongxin Intl's related-party transactions. Then on November 20, 2010, Tongxin announced that Tongxin International’s CEO and CFO were being removed from their positions with the Company and lowered its revenue guidance for fiscal year 2010 from its prior outlook of $150-$160 million to a range of $100-$110 million.
Shares of Tongxin International Ltd. (PINKSHEETS: TXIC) fell from $2.95 per share on Nov. 12, 2010 to $1.47 per share on Nov. 23, 2010.
Then, on December 13, 2010, Tongxin announced that it had filed a civil suit against its former CFO, Jackie Chang, due to the wrongful transfer of Tongxin Intl funds by Chang into an account for the benefit of her and Tongxin Intl’s former CEO, Rudy Wilson. On this news, Tongxin's stock declined $0.05 per share to close at $1.35 per share on December 14, 2010. The plaintiff claims that as a result of defendants' false statements, Tongxin Intl's stock traded at artificially inflated prices during May 15, 2009 and December 14, 2010, reaching a high of $11.39 per share on October 14, 2009. Shares of Tongxin International Ltd. (PINKSHEETS:TXIC) recently traded at $1.22 per share, roughly 90% less than in October 2009.