Tongxin International Ltd (OTC: TXIC) Investor Securities Class Action Lawsuit 01/03/2011

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Company Name(s): 
Tongxin International
Case Name: 
Tongxin International Shareholder Class Action Lawsuit 01/03/2011
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
PINK: TXIC
OTC: TXIC
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
01/03/2011
Class Period Begin: 
05/18/2009
Class Period End: 
12/17/2010
Court of Filing: 
U.S. District Court for the Central District of California
Deadline To File for Lead: 
03/04/2011
Date Settled: 
07/09/2012
Settlement Amount: 
$3,000,000
Deadline to Participate in Settlement: 
08/01/2012
Summary: 

July 9, 2012 - The court held a final settlement hearing and issued a final judgement and order of dismissal with prejudice.

May 3, 2012 - The settlement was preliminarily approved.

March 15, 2012 - Parties filed a stipulation of settlement.

September 6 and 19, 2011 - Defendants filed motions to dismiss.

June 20, 2011 - The lead plaintiffs filed an amended consolidated complaint.

June 20, 2011 - All cases were consolidated.

May 25, 2011 - The first case got transferred to the U.S. District Court for the Central District of California.

April 21, 2011 - Lead plaintiffs and lead counsel were appointed.

March 4, 2011 - Lead plaintiff motions were filed.

January 12, 2011 - Another investor filed a complaint in the U.S. District Court for the Central District of California.

January 3, 2011 - An investor in shares of Tongxin International Ltd (OTC: TXIC) filed a lawsuit for certain TXIC shareholders in the U.S. District Court for the Eastern District of New York against Tongxin International Ltd and certain of its officers and directors.

According to the complaint the plaintiff alleges on behalf of purchasers of Tongxin International Ltd (OTC: TXIC) common stock during the period between May 15, 2009 and December 14, 2010 that Tongxin International Ltd 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 Ltd’s business and financial results. While Tongxin International Ltd’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 International Ltd announced that it would delay filing its Form 20-F for the fiscal year ending December 31, 2009. On October 12, 2010, Tongxin International Ltd announced that NASDAQ would delist Tongxin International Ltd’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 Ltd’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 International Ltd's related-party transactions. Then on November 20, 2010, Tongxin International Ltd announced that Tongxin International Ltd’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 (OTC: 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 International Ltd announced that it had filed a civil suit against its former CFO, Jackie Chang, due to the wrongful transfer of Tongxin International Ltd funds by Chang into an account for the benefit of her and Tongxin International Ltd’s former CEO, Rudy Wilson. On this news, Tongxin International Ltd'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 International Ltd'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 (OTC: TXIC) recently traded at $1.22 per share, roughly 90% less than in October 2009.