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Bernstein Liebhard LLP today announced that a lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of a class (the “Class”) of investors who purchased China Automotive Systems, Inc. (“China Automotive” or the “Company”) (NASDAQ: CAAS) shares between the period of March 20, 2010 and March 17, 2011 (the “Class Period”). Plaintiffs allege violations of the Securities Exchange Act of 1934 against China Automotive and several of its officers and directors.
The Complaint charges that China Automotive and certain of its officers and directors violated the federal securities laws. Specifically, the Complaint alleges that defendants failed to disclose the following: (1) the Company improperly accounted for its convertible notes issued on February 15, 2008; (2) that, as a result, the Company’s financial results were incorrectly stated during the Class Period; (3) that the Company’s financial results were not prepared in accordance with Generally Accepted Accounting Principles (“GAAP”); (4) that the Company lacked adequate internal and financial controls; and (5) that, as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.
Shares of China Automotive dropped from a close of $10.23 per share on March 16, 2011 to a closing price of $8.81 per share On March 17, 2011 on news it expected to restate its financials. On March 17, 2011, the Company’s audit committee of the board of directors stated it would delay the Company’s annual financial statement and would need to restate all previously issued financial statements for the fiscal year 2009 and the first three quarters of 2010, and that these financial statements should no longer be relied upon. On March 18, 2011, the Company announced that it received a letter from NASDAQ stating that the Company was no longer in compliance with NASDAQ Marketplace rules.