Lawyers in the United States are going after China-based Longwei Petroleum Investment Holding Limited for allegedly misleading investors.
The U.S.-based law firm of Cohen Milstein Sellers & Toll PLLC has filed a class action complaint in the United States District Court for the Southern District of New York on behalf of purchasers of common stock of Longwei Petroleum Investment Holding Limited from May 17, 2010, through January 3, 2013, inclusive.
Longwei is an energy company engaged in the wholesale distribution of finished petroleum products in China. The complaint alleges that throughout the period, defendants made materially false and misleading statements, and omitted materially adverse facts, about Longwei's business and financial condition.
Specifically, the complaint alleges Longwei failed to disclose a material related party investment totaling USD32 million made by Longwei's subsidiary, Shanxi Zhinghe Energy Conversion Co. Ltd.; Longwei failed to disclose that Yongjun Cai, its CEO, was a minority owner of three of Longwei's operating subsidiaries; and Longwei greatly exaggerated its wholesale fuel sales.
As a result of these materially false and misleading statements, Longwei's stock was allegedly artificially inflated during the period. On January 3, 2013, an Internet report published by Geoinvesting.com disclosed these potentially materially false and misleading statements and omissions. On this news, Longwei's stock reportedly fell 73%, closing at $0.62 per share on January 3, 2013, down from $2.30 per share on January 2, 2013.
