China Techfaith Wireless Communication Technology Limited
- Company Name
- China Techfaith Wireless Communication Technology Limited
- Stock Symbol
- Class Period
- July 12, 2018 to December 19, 2018
- Motion Deadline
- March 9, 2019
- Eastern District of New York
The complaint charges China Techfaith and certain of its officers with violations of the Securities Exchange Act of 1934. China Techfaith engages in the design and development of specialized mobile handsets for consumers and enterprises in the People’s Republic of China and internationally.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding China Techfaith’s business and prospects, including that China Techfaith’s subsidiary Techfaith Wireless Technology Group Limited’s agreement to sell its wholly-owned subsidiary, Charm Faith Limited, would not be as lucrative as it had led investors to believe, and that China Techfaith had failed to adequately disclose that changing market conditions would negatively impact its profitability. As a result of this adverse information being withheld from the market, the prices of China Techfaith securities were artificially inflated during the Class Period.
Then on December 20, 2018, before the market opened, the Company announced that its operating expenses for the first half of 2018 had more that quintupled compared to the same period in the prior year and that, “[a]s a result of the lower transaction valuation [of the announced sale of Charm Faith Limited in July 2018], the Company wrote down the carrying value of the assets held for sale to fair value less any cost to sell as of June 30, 2018, and recognized an impairment loss of US$62.2 million under net loss from discontinued operations for the first half period ended on June 30, 2018.” On this news, the price of China Techfaith shares fell $0.59 per share, or over 35%, to close at $1.07 per share on December 20, 2019.