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The lawsuit, which is captioned Crayder v. SinoTech Energy Limited, et al., 11-CV-05935, alleges violations of the United States securities laws on behalf of purchasers of SinoTech's American Depository Shares ("ADSs") from November 3, 2010 through August 16, 2011 (the "Class Period"), including purchasers of ADSs in the Company's November 3, 2010 initial public offering (the "November IPO"). Claims for November IPO purchasers arise under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (the "Securities Act"). Claims for other Class Period purchasers fall under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder by the United States Securities and Exchange Commission.
The lawsuit asserts numerous problems with SinoTech's previously issued financial statements and declarations about its future prospects. Among other claims, the complaint alleges that: (1) the Company's sole import agent, which accounted for more than $100 million worth of oil drilling equipment orders, is an empty shell company with no sign of operations; (2) the Company's only chemical supplier is also an empty shell company, with little or no revenues; (3) the Company's largest subcontracting customer, which provides the vast majority of SinoTech's revenues, has unverifiable operations with minimal revenues; (4) the financial statements SinoTech issued in the United States are inconsistent with similar filings the Company made in China; (5) the Company has engaged in undisclosed related-party transactions in violation of Generally Accepted Accounting Principles; and (6) positive statements the Company made regarding its internal financial controls were false and misleading.
On August 16, 2011, a research analyst writing under the name Alfred Little published an investigative report (the "Report") detailing these and other problems at SinoTech. The day the Report was issued, the Company's stock price plummeted more than 40%, falling from $4.02 per share on August 15, 2011 to $2.35 per share at the close of trading on August 16, 2011 - a decline of $1.67 per share on unusually high trading volume. The NASDAQ halted SinoTech trading after the market closed on August 16, 2011, announcing that trading would remain halted until the Company "fully satisfied NASDAQ's request for additional information." To date, trading has not resumed.
If you purchased the common stock of SinoTech and wish to serve as lead plaintiff, you must move the Court no later than October 18, 2011 to request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. To be appointed lead plaintiff, the Court must decide that your claim is typical of the claims of other class members, and that you will adequately represent the class. Your share in any recovery will not be enhanced or diminished by the decision whether or not to serve as a lead plaintiff. Any member of the proposed class may retain Cohen Milstein Sellers & Toll PLLC or other attorneys to serve as your counsel in this action, or you may do nothing and remain an absent class member.
Cohen Milstein Sellers & Toll PLLC has significant experience in prosecuting investor class actions and actions involving securities fraud. The firm has offices in Washington, D.C., New York, Philadelphia, Chicago, and West Palm Beach, and is active in major litigation pending in federal and state courts throughout the nation.
The firm’s reputation for excellence has repeatedly been recognized by courts which have appointed the firm to lead positions in complex multi-district or consolidated litigation. Cohen Milstein Sellers & Toll PLLC has taken a lead role in numerous important cases on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total over a billion dollars. Prior results do not guarantee a similar outcome. For more information visit www.cohenmilstein.com.
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