Chinese digital media company sued over making false financial statements to investors

By Shaun Zinck | Jun 16, 2015

Attorney Laurence Rosen is representing a securities class action lawsuit against Xunlei Limited   The Rosen Law Firm

LOS ANGELES (Legal Newsline) - A Chinese digital media company is facing a class action lawsuit over allegations the company made false statements to the U.S. Securities and Exchange Commission when it went public in the United States.

Christopher Shreves filed the lawsuit June 8 in U.S. District Court in California against Xunlei Limited, claiming the company failed to disclose information about one of its projects that would eventually become financially “detrimental” to the company's finances.

According to the lawsuit, Project Crystal, a technology innovation from Xunlei, enables the company to “transfer bandwidth and storage from users.” Executives said the product would reduce bandwidth and costs to the company, the suit says.

On May 20, financial information revealed revenues for the company were 8.4 percent down compared to 2014 and a nearly 15 percent drop from the previous quarter. On this news, the stock fell about 15 percent to $9.71 per share.

The lawsuit claims the company withheld information about the viability of Project Crystal from investors.

The lawsuit is seeking class status for those who held Xunlei Limited stock between June 24, 2014, and May 20 of this year. The suit is also seeking an unspecified amount in damages plus court costs.

Shreves is represented by Laurence M. Rosen of The Rosen Law Firm, P.A. in Los Angeles.

U.S. District Court for the Central District of California case number 2:15-cv-04288.

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