MURRAY, FRANK & SAILER LLP Announces Investigation Of Longtop Financial Technologies, Limited.
MURRAY, FRANK & SAILER LLP is investigating securities fraud claims against Longtop Financial Technologies, Limited (“Longtop” or the “Company”) (NYSE: LFT) and certain of its officers and/or directors, on behalf of purchasers of Longtop securities between June 29, 2009 and May 17, 2011, inclusive (the “Class Period”).
The investigation concerns violations of the Securities Exchange Act of 1934 (the “Exchange Act”) that occurred when the Company and certain of its officers and/or directors issued materially false and misleading statements or omitted to state material information during the Class Period regarding Longtop’s accounting policies and business operations. As a result of these misstatements, Longtop’s stock traded at artificially inflated prices throughout the Class Period.
Between April 26, 2011 and May 9, 2011, Citron Research, John Hempton of Bronte Capital, and OLP Global issued reports on Longtop that outlined concerns about the Company and its public disclosures. Among the concerns outlined were (1) margins substantially in excess of the Company’s competitors; (2) an “unconventional staffing model” under which the majority of the Company’s employees were not directly employed by the Company; (3) allegations of previous misdeeds by the Company’s Chairman and CEO, including a previous lawsuit for unfair business practices; (4) certain transfers by the Company’s Chairman of the Company’s stock to his friends and employees; (5) questions about the Company’s claims regarding its cloud-based storage service; and (6) questions about the Company’s accounting figures.
On May 17, 2011, trading of the Company’s ADSs was halted on NYSE, pending an announcement by the Company. The following day, May 18, 2011, the Company announced that it would not release its financial results for the fourth quarter of 2010 and fiscal year 2010 on May 23, 2011, as previously scheduled. Instead, on May 23, 2011, the Company issued a press release announcing, among other things, (1) the resignation of the Company’s CFO; (2) the resignation of the Company’s auditor, Deloitte Touche Tohmatsu CPA Ltd. (“DTT”), due to the DTT’s belief that the Company’s accounting records were false, and management’s interference with the audit process; (3) that the SEC was conducting an inquiry into the Company regarding matters related to DTT’s resignation; and (4) that the Company had initiated an independent investigation regarding matters related to DTT’s resignation.
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