Schiffrin & Barroway, LLP, have filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all securities purchasers of 51job.com (JOBS) between November 4, 2004 and January 14, 2005.
The complaint charges 51job, Donald Lucas, Rick Yan and Kathleen Chien with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
In a release issued by Schiffrin & Barroway, they say that 51job "failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the company improperly recognized recruitment advertising revenue in the third quarter; (2) that the company, a purported expert in Chinese labor markets, failed to realize that the drop in late-December advertising suggested that many Chinese firms have adopted a more Western schedule for hiring; (3) that as a result of this market shift, the company was forced to sharply lower its profit outlook; and (4) that as a consequence of the foregoing, defendants lacked a reasonable basis for their positive statements about the company's growth and progress."
On January 18, 2005, before the market opened, 51job announced softness in sales for the latter part of the month of December 2004, the exit of the peripheral stationery and office supplies business and updated guidance for the fourth quarter of 2004. 51job expected fourth quarter total revenues to be between CNY117 and CNY121 million, compared with CNY140 million, the low-end of its previous forecasted range.
Shares of 51job fell $15.49 per share, or 35.37 percent, on January 18, 2005, to close at $28.32 per share, on unusually high volume.
51job has not yet formally responded to the news of the impending lawsuit.