What is the Longwei Petroleum Investment Holding Ltd. (LPH) class action lawsuit about?
Several class action lawsuits have been filed against Longwei Petroleum Investment Holding Ltd. ("Longwei" or the "Company") (NYSE MKT: LPH) and certain of its officers alleging violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The actions were filed in California Central District Court and New York Southern District Court on behalf of those who purchased Longwei shares between the dates of May 17, 2010 and January 3, 2013.
The lawsuits allege that the Company made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, the Company made false and/or misleading statements and/or failed to disclose that: (i) the Company grossly inflated its November 2012 sales figures for at least two of its fuel depot storage facilities; (ii) the Company failed to disclose a $32 million investment in a tourism business made by Longwei's subsidiary, Shanxi Zhonghe Energy Conversion Co., Ltd.; (iii) the Company failed to reflect on its balance sheet a non-controlling interest owned by its Chief Executive Officer; and (iv) the Company improperly classified at least one subsidiary as a non-operating subsidiary to avoid paying income taxes.
On January 3, 2013, GEOInvesting.com published a report revealing, among other things, that the Company inflated its November 2012 sales figures by several hundred multiples for its fuel depot storage facilities in Taiyuan and Gujiao, Shanxi Province.
On this news, Longwei stock declined $1.68 per share or nearly 73%, to close at $0.6244 per share on January 3, 2013. Longwei shares were halted by the exchange and have not traded since January 3, 2013.
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