Shares of Longwei Petroleum Investment Holding Limited (NYSE MKT: LPH) fell $1.68 or 72% after a report by Geoinvesting said the China-based oil and gas company exaggerated its main Taiyuan and Gujiao facilities’ November 2012 sales and did not account for an investment of $32 million in a tourism business made by its subsidiary Shanxi Zhonghe Energy Conversion Co., Ltd.
“The company’s purported business operations are massively overstated and a brazen fraud, on an order of magnitude unmatched before by any China-based companies we have seen,” Geoinvesting said in the report. Additionally, the report said it had little faith in LPH’s auditor, Anderson Bradshaw. The head of quality control for the auditor, Russell Anderson, was the audit partner of Yuhe International, another China-based company that had been sued by shareholders over misleading statements regarding the acquisition of 13 breeder farms.
Several class action law firms have initiated investigations into whether LPH violated securities laws. Sales of shares of LPH have been halted since Thursday, January 3, 2013. LPH disputed the claims made by Geoinvesting and said the blog post has numerous errors, misleading speculations and malicious interpretations of events.
Categories: Class Actions of Interest