Shareholders Sue The9 Over WoW Losses
October 30, 2009 by Joel Tan
Filed under MMORPG, MMORPG News, The9
Talk about adding insult to injury. After losing the license to World of Warcraft and failing to come out with another hit massively multiplayer online role-playing game, China-based online games operator The9 has been sued by its shareholders for allegedly violating the Securities Exchange Act of 1934 by making inaccurate statements about its finances between November 15th, 2006 and July 15th, 2009.
Oh, and we’re not talking about some law in China but the Securities Exchange Act of 1934, the law governing the secondary trading of stocks, bonds and the like in the United States of America.
High-profile law firm Coughlin Stoia Geller Rudman & Robbins LLP has filed the class action lawsuit against The9 on behalf of its shareholders with the Southern District Court of New York.
In the complaint, The9 shareholders alleged that The9 and certain directors and officers failed to disclose that the company was unlikely to renew its licensing contract with Blizzard Entertainment for World of Warcraft. As a result of the non-renewal of the license, The9 shares dropped 18 percent to USD$8.35 on July 15th after The9 reported a USD$36.9 million or 72 percent reduction in its 2008 net income.
Since it’s a class action suit, other parties may join. In fact, the law firm that’s handling the case is encouraging other shareholders to join. Here’s an excerpt from the announcement it made regarding the lawsuit:
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Samuel H. Rudman or David A. Rosenfeld of Coughlin Stoia at 800/449-4900 or 619/231-1058, or via email at djr@csgrr.com. If you are a member of this Class, you can view a copy of the complaint as filed or join this class action online. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
Pretty legalese, eh. Never mind if you can’t sift through the jargon. One thing is for certain, The9’s goose is cooked.
For more World of Warcraft news, stay tuned to MMOtaku or WoW Obsessed.
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