NEW YORK, Dec. 16, 2010 (GLOBE NEWSWIRE) -- Pomerantz Haudek Grossman & Gross LLP has filed a class action lawsuit against RINO International Corporation ("RINO" or the "Company") (formerly Nasdaq:RINO) (OTCBB:RINO) and certain of its officers and directors. The class action (Civil Action No.: 10-1908) is on behalf of a class of all persons or entities who purchased or otherwise acquired RINO securities during the period from May 15, 2008 through November 17, 2010, inclusive (the "Class Period"). The Complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
RINO, through its subsidiaries, operates as an environmental protection and remediation company in the People's Republic of China. The Company engages in designing, manufacturing, installing, and servicing wastewater treatment and flue gas desulphurization equipment primarily for use in the iron and steel industry; and anti‑oxidation products and equipment for use in the manufacture of hot rolled steel plate products.
The Complaint alleges that throughout the Class Period, defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company did not enter into at least two customer contracts and 20-40% of the Company's other contracts had problems for which it reported revenues during its 2008 and 2009 fiscal years; (2) that the Company's reported revenues for fiscal year 2009 to the SEC that were inflated by 94%; (3) that the Company's management was draining cash from the Company for its own business and personal uses; (4) that the Company lacked adequate internal and financial controls; and (5) that, as a result of the foregoing, the Company's financial results were materially false and misleading at all relevant times.
On November 10, 2010, Muddy Waters LLC ("Muddy Waters"), a research firm issued a report calling into question, among others, the Company's customer relationships, accounting, and financial results. The research firm claimed that its investigation indicated that RINO had fabricated customer relationships, exaggerated sales, and issued phony financial statements. In particular, the report highlighted that the same day that RINO closed a $100 million financing transaction, certain officers/directors "borrowed" $3.2 million from the Company to purchase a luxury home in Orange County, California.
On this news, shares of RINO declined by $2.34 per share, more than 15%, to close on November 10, 2010, at $13.18 per share, on unusually high volume. The stock further declined another $2.08 per share, or 15.08%, to close on November 11, 2010, at $11.10 per share after launching an internal review into Muddy Waters' allegations.
Then on November 15, 2010, RINO announced extremely disappointing third quarter 2010 results with revenues of $52.7 million and net income of $8.8 million, just over half the net income reported on the prior year. RINO also reduced its revenue forecast for 2010 from $221-$229 million to $203-$211 million. On this news, RINO's shares declined $3.46 per share, or more than 31%, to close on November 15, 2010, at $7.55 per share.
On November 19, 2010, RINO disclosed in a filing with the SEC that it had received a letter from its independent auditing firm which recounted a conversation between a member of the firm and RINO's Chief Executive Officer, defendant Zou Dejun, during which Dejun revealed that RINO had, in fact, not entered into two of the six customer contracts discussed in the Muddy Waters report. Furthermore, the independent auditors advised that its audit reports of the Company's previously issued financial statements for fiscal years 2008 and 2009 and its reviews of the Company's quarterly financial statements for fiscal years 2008 and 2009 and its reviews of the Company's quarterly financial statements for periods between March 31, 2008 and September 30, 2010 should no longer be relied upon.
When RINO's shares resumed trading on the OTC on December 8, 2010 after being halted by Nasdaq on November 17, 2010, the stock further declined $2.92 or 48% and closed at $3.15 per share.
If you are a shareholder who purchased RINO securities during the Class Period, you have until January 14, 2011 to ask the Court to appoint you as lead plaintiff for the class. A copy of the complaint can be obtained at . To discuss this action, contact Fei-Lu Qian at email@example.com or 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, with offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See .
CONTACT: Pomerantz Haudek Grossman & Gross LLP Fei-Lu Qian 888-476-6529 (ext. 241) firstname.lastname@example.org