RADNOR, Pa., April 15, 2011 /PRNewswire/ -- The following statement was issued today by the law firm of Barroway Topaz Kessler Meltzer & Check, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of purchasers of the securities of Puda Coal, Inc. (AMEX: PUDA) ("Puda" or the "Company"), who purchased or otherwise acquired Puda securities between November 13, 2009 and April 11, 2011, inclusive (the "Class Period"), including purchasers of the Company's securities who acquired their securities pursuant or traceable to the Company's equity offering (the "Offering") on or about December 8, 2010. If you are a member of this class, you can view a copy of the Complaint or join this class action online at http://www.btkmc.com/cases/puda/.
Members of the class may, not later than June 13, 2011, move the Court to serve as lead plaintiff of the class. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision of whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Barroway Topaz Kessler Meltzer & Check, LLP (Darren J. Check, Esq. or David M. Promisloff, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at [email protected]. For additional information about this lawsuit, or to join the class action online, please visit http://www.btkmc.com/cases/puda/.
The Complaint charges Puda and certain of its officers and directors and underwriters with violations of the Securities Act of 1933 and Securities Exchange Act of 1934. Puda is a supplier of premium cleaned coal used to produce coke for steel manufacturing in China. More specifically, the Complaint alleges that defendants failed to disclose and misrepresented the following material adverse facts which were known or recklessly disregarded by them: (1) that the Company's Chairman had engaged in unauthorized transfers of the ownership of Puda subsidiary Shanxi Coal; (2) that such transfers were not disclosed to investors, and in fact ran counter to the statements made by defendants; (3) that the Company's ownership stake in Shanxi Coal was substantially less than what it detailed to investors; (4) that the Company had improperly consolidated Shanxi Coal's financial results into Puda's financial results; (5) that the Company lacked adequate internal controls; (6) that, as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times; and (7) that, as a result of the foregoing, the materials disseminated in connection with the Offering were materially misleading when issued.
On April 8, 2011, investors were astounded when a report surfaced detailing illicit and unreported transactions by the Company's Chairman, Ming Zhao ("Zhao"). Specifically, the report revealed that in 2009, Zhao transferred ownership of Shanxi Coal to himself without obtaining shareholder approval. Zhao accomplished this with the help of his brother, Yao Zhao. Then in 2010, Zhao sold 49% of Shanxi Coal to a Chinese private equity firm for $37.2 million, and pledged the remaining 51% of Shanxi Coal to the private equity fund as security for a $379 million loan (which was subsequently increased to $530 million) at a 14.5% annual interest rate, in order to finance the development of coal mines. At no time were the Company's shareholders ever informed or made aware of these occurrences. Therefore, during the Class Period, Puda became nothing more than a shell corporation with no operating entity. Moreover, at no time during the Class Period did Puda have the stake in Shanxi Coal that it continuously told investors that it owned. Upon the release of these revelations, shares of the Company's stock fell $3.10 per share, or over 34 percent, to close on April 8, 2011 at $6.00 per share, on unusually heavy trading volume. Trading of the Company's shares was subsequently halted on April 11, 2011 (the next trading day).
Also on April 11, 2011, Puda announced that it had commenced an investigation regarding these unauthorized transactions. The Company disclosed that although the investigation was still "in its preliminary stages," there was evidence to support the allegations that "there were transfers by Mr. Zhao in subsidiary ownership that were inconsistent with disclosure made by the Company in its public securities filings." Further, Puda disclosed that Zhao had agreed to a "voluntary" leave of absence as Chairman of the Board of the Company until the investigation is completed.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Barroway Topaz Kessler Meltzer & Check, which prosecutes class actions in both state and federal courts throughout the country. Barroway Topaz Kessler Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world.
For more information about Barroway Topaz Kessler Meltzer & Check, or for additional information about participating in this action, please visit www.btkmc.com.
Barroway Topaz Kessler Meltzer & Check, LLP
Darren J. Check, Esq.
David M. Promisloff, Esq.
280 King of Prussia Road
Radnor, PA 19087
1-888-299-7706 (toll free) or 1-610-667-7706
Or by e-mail at [email protected]
SOURCE Barroway Topaz Kessler Meltzer & Check, LLP