18 Dec, 2008 - A securities fraud class action law suit has been launched in the US against food company China Organic Agriculture on behalf of some investors in the company.
The case, filed by law firm Sarraf Gentile LLP, involves a number of allegations under the Security Exchanges Act 1934 against defendants China Organic and certain of its officers and directors for the period July 12, 2007 to August 14, 2008, inclusive.
China Organic Agriculture has denied the allegations.
A statement released by lawyers Sarraf Gentile LLP said: “According to the complaint, the defendants took the Company public in early 2007 and made numerous statements during the Class Period regarding the Company's prospects and sales.
“Defendants, for example, claimed to be developing organic rice for sale in China, but according to the complaint, never developed any kind of product that could be sold at a competitive price.
“According to the complaint these and other Class Period statements were false and misleading, designed to inflate the price of the Company's stock. Indeed, according to the complaint, insiders sold tens of millions of dollars worth of Company stock during the Class Period, acquired for themselves a luxury retreat in California, sold off the Company's only significant operation and within eighteen months of taking the Company public left only an empty shell and huge shareholder losses.”
China Organic Agriculture, Inc. Chief Executive Officer Jinsong Li said the allegations were completely without merit.
“We will vigorously defend China Organic against these assertions and will continue to act in the interests of our shareholders,” said Mr Li.
The lawsuit is pending in the United States District Court for the Southern District of New York.
On 1 October, 2008, FLEXNEWS reported China Organic Agriculture, Inc., had sold its Jilin Songyuan City ErMaPao Green Rice Limited subsidiary for $8.7 million to Bothven Investments Limited.
A company statement released at the time said: “The ErMaPao segment had shown significant decreases in sales of both green and organic rice since the beginning of 2008 leading to the Board’s decision to sell the business.”