Beginning in 2010 and accelerating in 2011, plaintiffs' lawyers filed a wave of securities class action lawsuits against U.S.-listed Chinese companies, many of which obtained their U.S. listings via reverse merger. These cases have been making their way through the courts, and some have now reached the settlement stage. The settlements seem to share more in common than the involvement of U.S.-listed Chinese companies - the settlements are also relatively modest.
The latest of these cases to settle is the lawsuit involving Orient Paper and certain of its directors and officers. According to the company's June 21, 2012 press release, the parties to the suit have agreed to settle the case "in exchange for a $2 million payment from the Company's insurer." The settlement is subject to court approval.
As I discussed in a post at the time (refer here), the Orient Paper case was the first of the of the Chinese reverse merger company securities suits to survive a motion to dismiss. On July 20, 2012, Central District of California Judge Valerie Baker Fairbanks denied the defendants' motion to dismiss.
The Orient Paper case is not the first of this group of securities suits filed against U.S.-listed Chinese companies to settle. For example, on March 15, 2012, the parties to the securities suit involving Tongxin International filed a settlement stipulation in the Central District of California indicating that they had settled the case for $3 million. The Tonxin settlement will be funded by the company's insurer.
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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
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