The9 Executives Sued by U.S. Shareholder
Sohu IT, 10/22/09
According to foreign media reports, Lawrence Glaser, a shareholder of Chinese online game operator The9 (Nasdaq: NCTY), has filed suit in Manhattan federal court against The9 and its top executives for revealing incomplete or false information that caused shareholders to buy The9 stock at inflated prices.
The plaintiff has filed suit for compensation on behalf of shareholders who purchased the company's American Depository Shares (ADS) between November 15, 2006 and July 15, 2009.
The suit focuses on an agreement between a The9 affiliate and Vivendi Universal Games to operate World of Warcraft (WoW) in China. In a fourth quarter report for 2005 released on February 23, 2006, The9 reported USD 26.2 mln in operating revenues, a 15% consecutive increase, which included net revenues brought in by WoW.
The plaintiff cited a The9 statement which said that The9 calculated WoW operating revenues based on actual user playing time, but that according to The9's agreement with Vivendi, The9 did not have direct access to such data. "This was the first time that The9 had revealed to the investing public that it had no controls in place to ensure that its revenue reports concerning WoW were accurate," said the complaint.
The9 CEO Zhu Jun, president Chen Xiaowei, two former CFOs, as well as George Lai, who stepped in as CFO in 2008, are among the executives being sued along with the company.
Keywords: The9 WoW Chen Xiaowei Zhu Jun George Lai Internet NCTY law litigation online gaming
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