Xinhua Finance Media may have misled investors during its IPO by failing to inform investors that its CFO was a defendant in a civil RICO case, was an investment banker at a securities firm subject to a cease and desist order for securities violation and had previously been a major investor in two companies sued by the SEC for securities fraud.
This is a securities fraud class action lawsuit against Xinhua Finance Media, certain officer of the Company, J.P. Morgan Securities Inc., UBS AG, CIBC World Markets Corp., and WR Hambrecht & Co., LLC.
The class action complaint alleges that the defendants made, or facilitated, misleading statements in the Xinhua Finance Media's March 8, 2007 prospectus (the 'Prospectus'), issued in connection with the offering of 23,076,932 ADSs, representing 46,153,846 common shares at $13 per share.
The class action complaint alleges that the Prospectus failed to disclose material information that since April 2006, prior to the Xinhua Finance Media's IPO, Shelly Singhal, the Company's CFO at the time of the IPO, was simultaneously an investment banker and stockbroker in charge of Bedrock Securities. Since April 2006, prior to the Company's IPO, Bedrock had been under a Nasdaq cease-and-desist order for violating SEC regulations. Moreover, reports also surfaced that Singhal had been fighting a private civil racketeering lawsuit in California and had previously been a major investor in AremisSoft and ACLN, companies previously sued for fraud by the SEC. This information was never disclosed in the Prospectus.
Name (Stock Symbol)
Xinhua Finance Media Ltd. (XSEL)
Xinhua Finance Media Ltd., now known as Xinhua Sports & Entertainment Limited, produces television programs and advertisements in China.
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