The United States District Court for the Southern District of New York has approved the settlement agreement reached by KongZhong (KONG) to resolve a securities class action arising out of the company's 2004 initial public offering.
Under the settlement, the company will pay US$3.5 million to resolve all claims asserted against it and the other defendants in this action.
Persons who purchased or sold the company's ADSs between July 9, 2004 and August 17, 2004 may be eligible to recover pursuant to the settlement.
The company says it set aside the settlement amount of US$3.5 million in an escrow account and made a provision during the third quarter 2005.
The company believes that it has been in compliance with securities laws and made appropriate and necessary disclosures in its prospectus dated July 9, 2004 at the time of the initial public offering.
The company says it nevertheless agreed to this settlement to avoid the expense, distraction and uncertainty associated with continued litigation without admitting any fault, liability or wrongdoing.