NEW YORK, Sept. 13, 2004 (PRIMEZONE) -- Abbey Gardy, LLP commenced a Class Action lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of American Depositary Shares ("ADSs") of KongZhong Corporation ("KongZhong" or the "Company") (Nasdaq:KONG) between July 9, 2004 and August 17, 2004, inclusive (the "Class Period").
The Complaint alleges that defendants violated Sections 11, 12(a) and 15 of the Securities Exchange Act of 1933 by issuing a false and misleading Prospectus in connection with the initial public offering of KongZhong ADSs (the "IPO"). The Prospectus, which forms part of the Registration Statement, became effective on or about July 9, 2004, and 10,000,000 of KongZhong's ADSs (with each ADS representing 40 ordinary shares) were sold to the public, thereby raising approximately $100 million. Of the $100 million raised, approximately $20 million went to certain selling shareholders. The Complaint names as Individual Defendants Yunfan Zhou, Nick Yang and Richard Wei. Also named as defendants are the underwriters of the IPO.
The complaint alleges that KhongZhong failed to disclose its status with China Mobile in the Prospectus they had filed with the Securities Exchange Commission for the IPO. In their Prospectus, KongZhong describes itself as "the leading provider of advanced second generation, or 2.5G, wireless interactive entertainment, media and community services, in terms of revenue, to customers of China Mobile Communications Corporation, or China Mobile, which has the largest mobile subscriber base in the world." The complaint alleges that the Prospectus failed to disclose and misrepresented the following adverse facts, among others: (1) that in early June 2004 KongZhong was in violation of the Company's agreement with China Mobile because it had carried inappropriate content on its interactive voice response service; (2) that in response to such violation, KongZhong would be subject to sanctions and penalties that could materially impact its business; and (3) as a result of the above, KongZhong's relationship with China Mobile would be negatively impacted.
On August 18, 2004, KongZhong announced that China Mobile had notified the Company and will be imposing sanctions on the Company. These sanctions include suspension of approval for KongZhong's new applications for new products and services on all platforms and joint promotions until the end of 2004 and suspension of approval for KongZhong's applications to operate in new platforms until June 30, 2005. News of this shocked the market, and the price of KongZhong ADSs dropped to $5.59 per ADS.
Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired KongZhong ADSs during the Class Period. If you purchased or otherwise acquired KongZhong ADSs during the Class Period, and either lost money on the transaction or still hold the ADSs, you may wish to join in the action to serve as lead plaintiff. If you purchased KongZhong ADSs during the Class Period, you may, no later than October 18, 2004 request that the Court appoint you as lead plaintiff.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiffs.'' Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.
Abbey Gardy, LLP has been retained as one of the law firms to represent the Class. The attorneys at Abbey Gardy, LLP have extensive experience in securities class action cases, and have played lead roles in major cases resulting in the recovery of hundreds of millions of dollars to investors. If you would like to discuss this action or if you have any questions concerning this Notice or your rights as a potential class member or lead plaintiff, you may contact:
Susan Lee or Nancy Kaboolian, Esq. Abbey Gardy, LLP 212 East 39th Street New York, New York 10016 (212) 889-3700 (800) 889-3701 (Toll Free) Or e-mail Susan Lee at slee@abbeygardy.com