Class Action Reports

Shanda Games Class Action Report

Levi & Korsinsky, LLP

April 19, 2018

On March 19, 2018, investors sued Shanda Games, Limited (“Shanda” or the “Company”) in United States District Court, Southern District of New York. Plaintiffs in the federal securities class action allege that they held or sold Shanda stock or American Depository Shares (“ADS”) at artificially deflated prices between May 5, 2015 and November 18, 2015 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. Here’s what you need to need to know about the Shanda Games class action lawsuit:


Summary of the Allegations

Company Background

Shanda (formerly NASDAQ: GAME) is an online game developer, operator and publisher based in China.

As such, it makes all sorts of multi-player online role-playing games. Its games are also available on various mobile devices. Founded in 2001, the Company also generates revenue through licensing activities.

As of December 31, 2104, the end of Shanda’s last fiscal year as a public company, there were more than 276 million shares of its common stock outstanding, including at least 13 million ADS, made available through its initial public offering in 2009.

Summary of Facts

Shanda and seven individuals identified as senior officers and/or directors during the Class Period now stand accused of deceiving investors by making false and misleading public statements during the time in question.

By knowingly or recklessly doing so, they allegedly tricked shareholders into waiving certain rights and caused Shanda stock/ADS to trade at artificially deflated prices during the Class Period.

The truth began to surface on February 4, 2016, when Shanda filed a petition in the Cayman Islands, where it is incorporated. The petition dealt with the “right to seek appraisal,” and sought “the court’s determination of the fair value of Shanda’s shares with respect to three dissenting shareholders.”

On April 25, 2017, the Grand Court of the Cayman Islands “awarded the dissenters $16.68 per ADS (amounting to $8.34 per share),” which reflected a 135 percent increase over the “deal price.”

A closer look…

As alleged in the March 19 complaint, the following took place during the Class Period:

On April 3, 2015, the Company announced that it had “entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Capitalhold and Capitalcorp Limited, a corporation and wholly owned subsidiary of Capitalhold (“Capitalcorp”).”

As per the terms of the Merger Agreement, Shanda stockholders received “$3.55 per Class A ordinary shares and $7.10 per American Depository Shares (“ADS”) in cash in exchange for, respectively, each share of ordinary Shanda common stock and of Shanda ADS that they owned (the “Merger Consideration”).”

At an extraordinary general meeting (“EGM”) held on November 18, 2015, the vast majority of the participants approved the merger.

Between May 5, 2015 and October 13, 2015, “in order to convince Shanda stockholders to vote in favor of the Merger, Defendants authorized the filing of a materially false and misleading Proxy Statement” with the SEC.

However, in rendering its decision, the Grand Court of the Cayman Islands found that the Proxy Statement included “several material errors for which it further found no reasonable basis.”

Actions You May Take

If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.

NOTE: The deadline to file for lead plaintiff in this class action is May 21, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.

In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Shanda common stock or ADS using court approved loss calculation methods.


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