Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against Tongxin International Ltd.

January 12, 2011 at 05:40 pm EST

MarketScreener.com By

Robbins Geller Rudman & Dowd LLP (?Robbins Geller?) (http://www.rgrdlaw.com/cases/tongxin/) today announced that a class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of Tongxin International Ltd. (?Tongxin?) (NASDAQ:TXIC) common stock during the period between May 15, 2009 and December 14, 2010 (the ?Class Period?).

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from January 3, 2011. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at djr@rgrdlaw.com. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/tongxin/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges Tongxin and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Tongxin, through its subsidiary, Hunan Tongxin Enterprise Co. Ltd., designs, develops, manufactures, sells, and services engineered vehicle body structures for light, medium, and heavy duty trucks, and light vehicles in the People's Republic of China.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and financial results. Specifically, defendants improperly accounted for Tongxin's related-party transactions. As a result of defendants' false statements, Tongxin's stock traded at artificially inflated prices during the Class Period, reaching a high of $11.39 per share on October 14, 2009.

On June 30, 2010, Tongxin announced that it would delay filing its Form 20-F for the fiscal year ending December 31, 2009. On October 12, 2010, Tongxin announced that NASDAQ would delist the Company's stock due to its failure to timely file its Form 20-F and acknowledged that a report issued by KPMG, the forensic accountants hired by the Company's Audit Committee, concluded that the documentary support for certain of its related-party transactions was contradictory, insufficient and lacking in substantive detail and/or accuracy, thus calling into question the validity of the transactions. On November 20, 2010, Tongxin announced that the Company's CEO and CFO were being removed from their positions with the Company and lowered its revenue guidance for fiscal year 2010 from its prior outlook of $150-$160 million to a range of $100-$110 million. Then, on December 13, 2010, Tongxin announced that it had filed a civil suit against its former CFO, Jackie Chang, due to the wrongful transfer of Company funds by Chang into an account for the benefit of her and the Company's former CEO, Rudy Wilson. On this news, Tongxin's stock declined $0.05 per share to close at $1.35 per share on December 14, 2010.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) Tongxin improperly accounted for its related-party transactions such that its financial statements were presented in violation of Generally Accepted Accounting Principles; and (b) defendants failed to maintain proper internal controls related to Tongxin's engaging in and accounting for its related-party transactions and over the safeguard of the Company's assets.

Plaintiff seeks to recover damages on behalf of all purchasers of Tongxin common stock during the Class Period (the ?Class?). The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Robbins Geller, a 180-lawyer firm with offices in San Diego, San Francisco, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. The Robbins Geller Web site (http://www.rgrdlaw.com) has more information about the firm.