China-Biotics Inc. Faces Yet Another Investor Investigation Over Possible Securities Laws Violations

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A substantial stock drop followed by a trading halt spurred yet another investigation on behalf of investors of China-Biotics Inc. (NASDAQ:CHBT) concerning possible new violations of Federal Securities Laws by China-Biotics.

The investigation by a law firm focuses on potential claims on behalf of purchasers of the securities of China-Biotics, Inc. (NASDAQ GS: CHBT), concerning whether the company and certain of its officers and directors have violated federal securities laws. Specifically, the investigation concerns whether China Biotics or others may have violated securities laws by issuing a series of statements regarding its business, its prospects and its operations that were materially false and misleading at the time they were made.
China-Biotics Inc. reported that its total revenue more than doubled over the past four years.
While China-Biotics reported to the SEC on March 31, 2007 for the past 12 months Total Revenue of $30.61million, China-Biotics announced on March 31, 2010 for the past 12 months Total revenue of $81.36million. However, its Net Income increased over the same period from $10.90million to $15.65million.

China-Biotics Inc. already faces a pending lawsuit filed in 2010 in the U.S. District Court for the Central District of California. The plaintiff alleged on behalf of investors who purchased the securities of China-Biotics Inc. (NASDAQ:CHBT) only during the period between July 10, 2008 and August 30, 2010 that China-Biotics Inc. (NASDAQ:CHBT) allegedly violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making between July 10, 2008 and August 30, 2010 material misstatements and omissions about its true financial condition. The plaintiff claims that between July 10, 2008 and August 30, 2010 Defendants misled investors about the quality, nature, and quantity of China-Biotics' purported retail outlets and stores. The complaint also alleges that China-Biotics' fiscal 2008 financial statements filed with the U.S. Securities and Exchanges Commission (“SEC”) are materially false because China-Biotics' fiscal 2008 financial statements filed with Chinese authorities reported merely a fraction of the cash, revenue and income set forth in China-Biotics' 2008 financial statements with the SEC.

Shares of China-Biotics Inc. (NASDAQ:CHBT) increased from as low as $6.49 during March 09 to as high as $18.65 in March 2010. However since then CHBT fell to as low as $3.46 on June 15, 2011, when the NSADAQ halted trading in CHBT shares. China-Biotics Inc filed for an extension of time to file with the SEC its Annual Report on Form 10-K for the fiscal year ended March 31, 2011. NASDAQ has requested that China-Biotics provide certain information and explanation relating to its delay in filing the Form 10-k.