Universal Travel Group, Inc. (NYSE: UTA)
MURRAY, FRANK & SAILER LLP is investigating securities fraud claims against Universal Travel Group, Inc. ("Universal Travel" or the "Company") (NYSE: UTA) and certain of its officers, on behalf of purchasers of Universal Travel securities between January 19, 2010 and April 12, 2011, inclusive (the "Class Period").
The investigation concerns violations of 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 regarding Universal Travel's financial performance, business operations and growth prospects. As a result of these misstatements, Universal Travel's stock traded at artificially inflated prices throughout the Class Period.
Specifically, it is alleged that during the Class Period, the Company and certain of its officers made false and misleading statements about or knew but failed to disclose that (1) the Company misrepresented the nature and quality of certain companies acquired by Universal Travel; (2) 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 false and misleading.
On March 8, 2011, analyst firm Glaucus Research Group issued a report (the "Report") alleging, among other things, that (1) Universal Travel's business is far smaller than its public filings represented; (2) the Company's business model is not credible; (3) the Company's website is barely functional and received minimal traffic compared to its competitors; (4) the Company has far less cash on its balance sheet than its public filings and public statements indicated; (5) the Company's acquisition targets had much smaller earnings than its public filings represented; and (6) the Company exaggerated the extent of its relationship with Agoda, a Priceline.com subsidiary. In response to the Report, Universal Travel's stock price fell from a close of $6.18 per share on March 8, 2011, to a close of $5.71 on March 9, 2011, a drop of approximately 7.6%. The Company did not respond immediately to the allegations in the Report, and during the week that followed, the Company's share price continued to drop, ultimately closing at $5.18 per share on March 14, 2011.
On March 15, 2011, the Company issued a press release, purportedly confirming that it would release its audited financial results for fiscal year 2010 its fourth quarter 2010 financial results on March 30, 2011. Subsequently, on March 29, 2011, after the market close, the Company issued a press release announcing that it would postpone its earnings conference call to "later in 2011". On the news, the Company's stock price dropped from a close of $5.39 per share on March 29, 2011 to a close of $4.33 per share on March 30, 2011, a drop of approximately 19.6%, on unusually heavy volume.
On April 12, 2011, trading in the Company's stock was halted on NYSE. Subsequently, on April 14, 2011, Universal Travel filed with the SEC a Form 8-K announcing the resignation of its auditor Windes & McClaughry Accountancy Corporation ("Windes"). The Form 8-K listed multiple red flags observed by Windes prior to their resignation, and noted that Windes had found the Company's management and audit committee to be "unresponsive, unwilling, or reluctant to proceed in good faith" and that Windes had "lost confidence in the Board of Directors' and the Audit Committee's commitment to sound corporate governance and reliable financial reporting".
If you purchased Universal Travel securities within the Class Period, 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