China Green Agriculture, Inc.

Case Details

Class Period: May 12, 2009 - January 4, 2011
Date Filed: October 15, 2010
Case Number: 3:10-cv-00648
Jurisdiction: District of Nevada
icon-casetype Case Type: Securities Case

Case Summary

The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against China Green Agriculture, Inc., certain of its senior executives, and other entities associated with the Company’s various offerings during the class period. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired China Green securities during the class period.

China Green, together with its subsidiaries, engages in the research, development, production, and sale of various types of fertilizers and agricultural products in the People’s Republic of China (“PRC”). In the Company’s publicly disseminated documents during the class period, including in the offering documents, China Green represented to investors that it had paid various taxes, including Value Added Taxes and Corporate Income Taxes, and that China Green had purchased 88 acres of land in Hu County, PRC for a large research and development center, among other things.

Specifically, the Complaint alleged Defendants misled investors about the quality and nature of the Company’s financial statements. China Green also disclosed that it had acquired Gufeng, a smaller company, for approximately $48 million, and had plans to increase manufacturing and production capacities. The Company also claimed it had a strong distribution network, and repeatedly reported seemingly amazing increases in sales, often doubling or even tripling profits compared to prior financial periods. These exciting reports of the Company’s increasing operational and financial industry leadership created strong demand for China Green’s securities, substantially increased the Company’s stock price, and allowed Defendants to complete the offerings in July 2009 and November/December 2009, reaping aggregate total proceeds of approximately $50,000,000.  When the true extent of Defendants’ fraud was revealed to the market, the Company’s stock price plummeted all the way to $7.48 at the end of the Class Period—a stunning fall from China Green’s class period high of $18.35, and a decline of nearly 60%.

On April 27, 2011, the Court appointed China Green Investor Group as Lead Plaintiff and Saxena White P.A. as Lead Counsel. Lead Plaintiff filed an amended complaint on June 13, 2011. On November 2, 2012, the Court issued an order denying in part Defendants’ motions to dismiss.

The parties participated in mediation on March 7, 2013, and notified the Court on April 8, 2013 that they reached an agreement in principle to settle the matter for $2,500,000 for the benefit of the class. On March 20, 2014, the Court preliminarily approved the settlement. On July 22, 2014, the Court entered final judgment finding the settlement to be fair, adequate and reasonable in all respects.