Tuesday, June 15, 2010

The settlement case regarding China Organic Agriculture (CNOA)

Summary: According to a press release dated December 13, 2008, the complaint alleges violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and names as defendants China Organic and certain of its officers and directors. The complaint goes on to state the defendants took the Company public in early 2007 and made numerous statements during the Class Period regarding the Company's prospects and sales. Defendants, for example, claimed to be developing organic rice for sale in China, but according to the complaint, never developed any kind of product that could be sold at a competitive price. According to the complaint these and other Class Period statements were false and misleading, designed to inflate the price of the Company's stock. Indeed, according to the complaint, insiders sold tens of millions of dollars worth of Company stock during the Class Period, acquired for themselves a luxury retreat in California, sold off the Company's only significant operation and within eighteen months of taking the Company public left only an empty shell and huge shareholder losses.

On June 08, 2010, a Preliminary Order In Connection With Settlement Proceedings was issued by the Court.

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