During 2011, plaintiffs filed a wave of securities class
action lawsuits against U.S.-listed Chinese companies. There were 39 of these
lawsuits filed in 2011 (out of 218 total securities class action lawsuit
filings in 2011), as discussed here.
Often the complaints in these lawsuits consisted of little more than a repetition
of the allegations that had been raised against the company in an Internet
While the Internet reports often raised sensational
allegations against the companies, the claimants still faced the problems
associated with trying to substantiate these allegations - a challenging task
under any circumstances, but even more so given political, legal and cultural
differences involved, as well as language and other barriers. It should come as
no surprise then that a few of these cases might just peter out.
Although there is no way to know for sure from the bare
record, that certainly seems to be the case in the securities class action
lawsuit that had been filed in 2011 against Yongye International.
As discussed at greater length here, plaintiffs
first filed a securities class action lawsuit against Yongye and certain of its
directors and officer in the Southern District of New York in May 2011. The
complaint relied on a May 11, 2011 Seeking Alpha article entitled
"Yongye International's Reported Production: SEC Filings Raise Red Flags" (here).
The article stated in part "that the company and its joint-venture partner
could not have produced, and therefore sold, the reported plant product
tonnages given the company's stated manufacturing capacity and shipments."
Ultimately several class actions were filed, which were later consolidated and
lead counsel was appointed. Lead counsel filed an amended
complaint in December 2011. The amended complaint again was reliant on the
allegations in the Seeking Alpha article.
On March 8, 2012, the company announced (here)
that the lead plaintiff's action had been voluntarily dismissed, with prejudice
as to the lead plaintiff. A copy of the court's March 6, 2012 order of
voluntary dismissal can be found here.
It is impossible to tell from the bare record what led up to the
voluntary dismissal. However, from the
court docket, it can at least be discerned that following a February 1,
2012 hearing in the case, Judge Richard J. Sullivan ordered that the plaintiffs
file a further amended complaint by March 5, 2012. It appears that rather than
submitting the amended complaint on March 5, the plaintiffs filed a motion to
voluntarily dismiss the complaint, with prejudice as to the lead plaintiffs.
It was noted when these cases were flooding in that
not perhaps all of these cases would prove to be meritorious and indeed some of
them have been dismissed (refer for example here).
On the other hand, other cases have survived the initial dismissal motions
(refer for example here).
The critical point is that even in those cases in which the plaintiffs' claims
survive the initial pleading threshold, their claims stiff face substantial
challenges, not the least of which are problems involved with effecting service
of process and in conducting discovery in China, as well as deriving from the
geographic distances and language issues involved. (Refer here).
The tactical retreat in the Yongye case, even before the
initial rounds of pleading were complete and before the threshold motions had
even been filed, suggests at a minimum that the barriers involved in pursuing
these cases in some instances may be prohibitive. And, without in any way
suggesting that it was in fact the case with the Yongye lawsuit, some of the
cases may have been filed in reliance on Internet reports and analysis that
could prove difficult to substantiate.
Many of these cases are still only in their earliest
stages. It remains to be seen have they will fare. There is the possibility
that in many instances the cases against the U.S.-listed Chinese companies will
not in the end amount to very much.
The Great Lionel Messi: Even
those of you that do not follow International soccer have probably seen
stories recently suggesting that FC Barcelona's talented Argentine striker Lionel Messi may be the
greatest soccer player ever. Even Time Magazine recently had an article
asking the question. If you are wondering what all the fuss is about - which
you might well do if you have only seen pictures of Messi, he looks, as one
commentator suggested, like the valet parking attendant to whom you would hesitate
to give your car keys - you will want to see this video of Messi's amazing
five-goal performance in Wednesday's UEFA Champions League qualifier game
between Barcelona and Bayer Leverkusen. A couple of the goals are the result of
terrific passing but the rest of the goals are pure Messi.
As one commentator noted on the Eurosport blog (here):
To describe Lionel Messi as a good player, a great
player, is a statement so facile as to render it pointless. Such is the utter
brilliance of the Barcelona forward, we are not just running out of
superlatives, as the old cliché has it, we are running out of ways to say we
are running out of superlatives. He is a man for which conventional language is
no longer sufficient.
But before we roll the videotape, let us pause for a few
words in appreciation for APOEL Nicosia, the team from Cyprus that is the
gatecrasher in the European club championship. If defending champion Barcelona
is the team to beat, APOEL is the underdog team to watch and root for. APOEL knocked out the
French powerhouse Lyon on Wednesday, in what one
commentator` said " might have been the biggest sports moment in Cyprus's
Now, for Mr. Messi:
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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