Puda Coal, Inc. (AMEX: PUDA)
MURRAY, FRANK & SAILER LLP is investigating securities fraud claims against Puda Coal, Inc. ("Puda" or the "Company") (AMEX: PUDA) and certain of its officers, on behalf of purchasers of Puda securities between September 15, 2010 and April 11, 2011, inclusive (the "Class Period"), including purchasers of Puda's common stock pursuant and/or traceable to the Company's registration statement and prospectus supplement dated December 8, 2010 (the "Registration Statement").
The investigation concerns violations of the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") that occurred when the Company and certain of its officers issued materially false and misleading statements or omitted to state material information during the Class Period and in the Registration Statement regarding Puda's financial performance, business operations and growth prospects. As a result of these misstatements, Puda's stock traded at artificially inflated prices throughout the Class Period.
Specifically, it is alleged that prior to and throughout the Class Period, the Company and certain of its officers made false and/or misleading statements and/or failed to disclose that: (1) prior to the Class Period, ownership interest in certain of the Company's key assets were fraudulently transferred to the Company's chairman, Ming Zhao; (2) during the Class Period, Puda was nothing more than a shell company; (3) that the Company's financial results were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) the Company lacked adequate internal and financial controls; and (5) as a result of the foregoing, during the Class Period, the Company's financial statements were materially overstated.
On April 8, 2011, a PUDA short-seller published an article entitled "Puda Coal Chairman Secretly Sold Half the Company and Pledged the Other Half to Chinese PE Investors." On the same day, the Company issued a press release announcing that it was reviewing the allegations regarding improper transactions by Ming Zhao. In response to the news, Puda's stock price dropped from a close of $9.10 per share on April 7, 2011 to a close of $6.00 per share on April 8, 2011, a drop of more than 34%, on unusually heavy trading volume.
On April 11, 2011, Puda issued a press release announcing that its Board of Directors had unanimously ratified a decision to launch a full investigation into the allegations raised in the article by the short-seller. The press release stated that "[a]lthough the investigation is in its preliminary stages, evidence supports the allegation that there were transfers by Mr. Zhao in subsidiary ownership that were inconsistent with disclosure made by the Company in its public filings." Following the announcement, on April 11, 2011, trading in the Company's stock was halted on AMEX. Subsequently, on April 29, 2011, the Company issued a press release announcing that it had received a buy-out proposal from Ming Zhao, offering to purchase all outstanding shares he did not already own for $12.00 per share.
If you purchased Puda securities within the Class Period, and/or pursuant and/or traceable to the Company's registration statement and prospectus supplement dated December 8, 2010, and you wish to discuss this investigation, or have any questions concerning this notice or your rights or interests with respect to these matters, please contact us.
MURRAY, FRANK & SAILER LLP