This is a securities fraud class action lawsuit against Giant Interactive Group, Inc. brought on behalf of all purchasers of ADSs pursuant and/or traceable to Giant Interactive's initial public offering.
Giant Interactive develops and operates online games in the People's Republic of China. Giant Interactive's primary game is ZT Online which is a free-to-play massive multi-player online game. Two key metrics for Giant Interactive's business health are average concurrent users ("ACU") and peak concurrent users ("PCU") of the ZT Online game. The ACU and PCU describe ZT Online's usage and therefor its revenues.
On Novmeber 19,2007, less than two weeks after raising $866 million in its IPO, Giant Interactive issued a press release announcing its financial results for the third quarter of 2007. Giant Interactive reported that ACU for the third quarter was 481,000, a decrease of 6% from the second quarter of 2007 and that PCU for the third quarter was 888,000, a decrease of 17.2%. Then, on November 20, 2007, before the market opened, Giant Interactive held a conference call with analysts and investors to review its earnings release. During the conference call, Giant Interactive attributed the decline in the third quarter ACU and PCU figures to a rule change to ZT Online that was implemented to discourage gold farming activity. (ZT Online's currency is gold which players can earn in the game. "Gold Farming" is when someone earns gold in the game, then sells that gold of "real" cash outside the game. This is no small issue for gamers.) Following Giant Interactive's earnings release and conference call, on November 20, 2007, the price of Giant Interactive ADSs dropped from $14.88 per ADS to $11.10 per ADS on extremely heavy trading volume.
This class action complaint alleges that investors in Giant Interactive's IPO had a right to know that Giant Interactive's rule change limiting gold farming was materially impacting its ACU AND PCU when investors purchased ADSs.
Name (Stock Symbol)
Giant Interactive Group, Inc. (GA)
Giant Interactive Group Inc. formerly Giant Network Technology Limited, is an online game developer and operator. The Company focuses on massively multiplayer online (MMO) games that are played through networked game servers, in which a number of players are able to simultaneously connect and interact. Giant Interactive operates three MMO games, all of which it has developed internally: ZT Online, ZT Online pay-to-play (PTP) and Giant Online.
The information provided on ClassAdvocate.com is general in nature,
does not apply to any particular factual situation, and is not and
should not be taken as legal or other professional advice. We make no
commitment or warranty that the factual, legal or any other information
on ClassAdvocate.com, or on any linked website, is accurate, complete,
error-free, or current. As such, you should not rely on such information,
and should seek professional advice if and as you determine appropriate.
ClassAdvocate.com is not a lawyer referral service, and no attorney-client
or confidential relationship is or should be formed by use of the site.
The investigations listed on ClassAdvocate.com are attorney advertisements
and do not in any way constitute a referral or endorsement by ClassAdvocate.com
or any approved or authorized lawyer referral service.