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securities class action has recently been commenced in the United States District Court for the Southern District of
New York on behalf of purchasers of Camelot (NYSE: CIS) American Depositary Shares ("ADSs") between
July 21, 2010 and
August 17, 2011 (the "Class Period"), including those who acquired Camelot ADSs pursuant or traceable to the Company's false and misleading Registration Statements and Prospectuses issued in connection with its
July 21, 2010 initial public offering ("IPO") and
December 10, 2010 Secondary Offering ("Secondary Offering") (collectively, the "Offerings").
The complaint charges Camelot, certain of its officers and directors and the underwriters of the Offerings with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Camelot is a holding company that conducts business through its operating subsidiaries in
China. The Company is a provider of enterprise application services and financial industry information technology ("IT") services in
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business practices and financial results. Specifically, defendants failed to disclose negative trends in Camelot's business, including with Camelot's most important customers. As a result of defendants' false statements, Camelot ADSs traded at artificially inflated prices during the Class Period, reaching a high of
$26.73 per share on
January 11, 2011.
July 21, 2010, Camelot announced the pricing of its IPO of 13.3 million ADSs at
$11.00 per ADS. Subsequently, on
December 9, 2010, Camelot announced the pricing of its Secondary Offering of 7,160,206 ADSs by selling shareholders at
$19.50 per ADS. The complaint alleges that the Registration Statements issued in connection with the Offerings were inaccurate and misleading and omitted to state material facts required to be stated therein.
August 15, 2011, Seeking Alpha published an article questioning several key components of Camelot's business. This caused Camelot's ADSs to drop to below
$9 per share. Then on
August 18, 2011, Camelot issued a press release announcing its second quarter 2011 unaudited financial results, including lower-than-expected guidance for fiscal 2011. On this news, Camelot's ADSs dropped
$2.24 per share to close at
$6.32 per share on
August 18, 2011, a one-day decline of 26%.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company's IT professionals were not a competitive advantage to the Company and many were dissatisfied with Camelot, which would adversely affect Camelot's ability to retain its customers; (b) the Company was suffering from undisclosed attrition of employees, which was having a negative impact on the Company's ability to attract new customers; (c) Camelot did not have the large numbers of highly trained professionals at its disposal that it had represented; and (d) Camelot's contract with its most important customer, IBM, was not as solid as represented, and would not be renewed on the same terms.