At least four separate law firms in the United States have issued press releases notifying investors that a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of all securities purchasers of Sina (SINA) between October 26, 2004 and February 7, 2005.
The complaint generally charges Sina, Wang Yan, and Charles Chao, with violations of the Securities Exchange Act of 1934.
More specifically, the complaint alleges that Sina failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:
1) that Sina was increasingly relying on services related to "fortune telling" advertising, like horoscopes and astrology, in order to meet its earnings forecasts and generate a positive revenue stream;
2) that the Chinese government had clamped down on "fortune telling" advertising and the resulting clampdown on "fortune telling" advertising would have a material effect on Sina's revenue stream;
3) that China Mobile's recent change in its billing process for multimedia messaging services Sina provides to China Mobile subscribers had a material effect on Sina's business; and
4) that as a result of the above, the defendants' positive statements about the growth and prospectus of Sina were lacking in any reasonable basis when made.
There is no official word yet from Sina about this case.