Cohen Milstein Sellers & Toll PLLC Announces Investigation Of Puda Coal, Inc. (PUDA)
Cohen Milstein Sellers & Toll PLLC, is conducting an investigation to determine whether Puda Coal, Inc. (“Puda Coal” or the “Company”) and certain of its officers, directors and/or underwriters made false and misleading statements and/or omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and/or violated Sections 11 and 15 of the Securities Act of 1933.
Several class action lawsuits have been filed in the U.S. District Court for the Southern District of New York by other law firms on behalf of all purchasers of the common stock of Puda (AMEX: PUDA) between September 15, 2009 and April 11, 2011, inclusive (the “Class Period”), including persons or entities who purchased Puda Coal's common stock pursuant and/or traceable to the Company's registration statement and prospectus supplement dated December 8, 2010.
Puda Coal is a supplier of premium high grade cleaned coal used to produce coke for steel manufacturing in China. The Company is headquartered in Taiyuan, China. The complaints allege that Puda Coal and certain of its officers, directors and/or underwriters (“Defendants”) misrepresented and/or failed to disclose that: (1) prior to the Class Period, certain of the individual defendants fraudulently transferred Puda Coal's ownership interest to defendant Ming Zhao; (2) Puda Coal was reduced to the status of a shell company during the Class Period; (3) Puda Coal's reported operating results and financial condition were materially overstated; (4) Puda Coal's financial statements were not fairly presented in conformity with U.S. GAAP and were materially false and misleading; (5) Puda Coal was operating with material deficiencies in its system of internal control over its financial reporting; and (6) based on the foregoing, certain of the Defendants lacked a reasonable basis for their positive statements about the Company, its prospects and growth.
Also according to the complaints, on April 8, 2011, analyst Alfred Little released a report charging that Puda Coal’s Chairman, defendant Ming Zhao, had secretly transferred ownership of Puda Coal’s sole operating entity, Shanxi Coal, to himself in 2009 without shareholder approval, citing “official government filings.” Little reported that this was done in order to raise money domestically, and to that end, Zhao and Shanxi Coal engaged in a series of transactions with China International Trust and Investment Company (“CITIC”) during the Class Period resulting in the Company being over a half a billion dollars in debt to CITIC with a 14.5% interest rate and defendant Zhao personally pocketing $37 million dollars. By January 2011, this debt had allegedly grown to $761 million.
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