Shareholder rights firm Robbins Umeda LLP announces the filing of a federal securities class action by an investor in the United States District Court for the Southern District of New York on behalf of purchasers of New Energy Systems Group (NASDAQ: NEWN) shares between April 15, 2010 and November 14, 2011 (the "Class Period").
New Energy Systems, through its wholly owned subsidiaries, claims to operate as a manufacturer and distributor of lithium ion batteries, battery shells and related application products primarily in China.
The complaint alleges that during the Class Period, certain officers at New Energy Systems issued a series of false and misleading statements to investors regarding the company's business and prospects. Specifically, the complaint alleges that the company's officers made false and misleading statements that failed to disclose: (1) the company did not have loyal customers; (2) the company did not manufacture quality products; and (3) the company's battery business would be unprofitable due to deficient battery quality and weak distribution networks. In addition, several of the company's officers failed to disclose that increased competition and counterfeit battery products were materially cutting into New Energy Systems' sales.
On November 14, 2011, after the market closed, New Energy Systems filed a Form 10-Q for the quarter ended September 30, 2011. The document disclosed that the company's revenue decreased 42% for the quarter and that the company was forced to decrease the price of its battery products in order to remain competitive. The release also included the acknowledgement by company officials that New Energy Systems expected considerable losses in its battery business "for the foreseeable future." On this news, shares of New Energy Systems collapsed. After closing at $1.81 on November 14, 2011, shares of New Energy Systems declined by $0.88 cents, or approximately 49% of their value, to close on November 15, 2011, at just $0.93 cents per share.