NEW YORK, Oct. 19, 2011 (GLOBE NEWSWIRE) -- Pomerantz Haudek Grossman & Gross LLP is investigating claims on behalf of investors of CNinsure Inc. ("CNinsure" or "Company") American Depositary Shares ("ADSs") during the period between March 2, 2010 and September 14, 2011 (the "Class Period"). Such investors are advised to contact Rachelle R. Boyle at rrboyle@pomlaw.com or 888-476-6529, ext. 350.
The investigation concerns whether defendants misrepresented and/or failed to disclose the following adverse facts: (a) that the Company was materially overstating its net income by understating the costs associated with the Company's scorecard system; (b) that the Company failed to account for incentives provided to the Company's agents as costs since those incentives were reasonably likely to be tendered at a future date; and (c) that, as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.
On December 2, 2010, OLP Global LLC ("OLP Global") issued an analyst report, which claimed that CNinsure may have understated commission expenses and overstated net income as a result of the way the Company incentivizes its agents. The OLP Global report alleged that the Company's incentive program was "no different from an equity-based compensation plan."
In reaction to the OLP Global report, the price of the Company's ADSs fell $5.36 per ADS over the next two trading days, or 24%, to close at $16.79 per ADS, on December 3, 2010.
On March 1, 2011, CNinsure announced its financial results for the fourth quarter and year-end December 31, 2010. The Company reported an increase in total operating costs and expenses of 29.0% and an increase in share-based compensation expenses of 298.9% for the same quarter in 2009.
In reaction to the increases in total operating costs and expenses and share-based compensation expenses, the price of CNinsure ADSs fell $1.96 per ADS, or 11%, to close at $15.92 per ADS, on March 2, 2011.
On May 16, 2011, the Company announced that it received a preliminary non-binding proposal letter from a company controlled by defendant Yinan Hu ("Hu"), a co-founder of CNinsure and its Chairman and Chief Executive Officer, and entities affiliated with him to acquire all of the outstanding shares of the Company for $19.00 per ADS. In response to this announcement, the price of CNinsure ADSs rose $4.16 per ADS, or 32%, to close at $17.32 per ADS.
On September 15, 2011, the Company issued a press release announcing that the Special Committee of its Board of Directors received a notice from defendant Hu and companies affiliated with him that "they have unanimously determined to withdraw the non-binding going private proposal dated May 14, 2011." In reaction the announcement, the price of CNinsure ADSs fell $1.64 per ADS, or 15%, to close at $9.03 per ADS. The price of the Company's ADSs continued to fall during the next two trading days, closing at $7.31 per ADS on September 19, 2011.
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 www.pomerantzlaw.com.