Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sun v. Han

United States District Court, D. New Jersey

May 14, 2015

CHAO SUN, on behalf of himself and all others similarly situated, Plaintiff,
HAN, et al, Defendants.


JOSE L. LINARES, District Judge.

This matter comes before the Court upon five motions submitted by various plaintiffs to: 1) appoint lead plaintiff; and 2) appoint lead counsel. (ECF Nos. 5, 6, 7, 8, 9). Pursuant to Rule 78 of the Federal Rules of Civil Procedure, no oral argument was heard. Upon consideration of the submissions, and for the reasons stated below, the motion by Plaintiff, Bin Qu, (ECF No. 6), is GRANTED. Accordingly, motions by Ting Xiong, (ECF No. 5), Bruce Zurbrick, (ECF No. 7), Walter Aerts and Zhu Xi, (ECF No. 8), and Joseph Hirsch, (ECF No. 9), are DENIED.


This is a securities fraud class action brought on behalf of all persons or entities who acquired securities of Telestone Technologies Corporation (hereinafter "Telestone") between March 31, 2010 and April 16, 2013. (Complaint, ECF No. 1, ¶ 1). The class seeks remedies pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. (Id.).

Telestone provides wireless local-access network technologies and solutions primarily in the People's Republic of China. (Id. ¶ 11). The Complaint alleges that Telestone misrepresented that its financial statements were presented in accordance with Generally Accepted Accounting Principles ("GAAP") and that its policy was to recognize revenues only if collectability was reasonably assured. (Id. ¶ 3). The Complaint further specifies that Defendants knew or recklessly disregarded and failed to disclose that: (1) in one of the Telestone's main segments, it had only collected 0.8%, 22.9%, and 21.5%, of its 2009, 2010, and 2011 revenues, respectively; (2) the Telestone's average collections period exceeds one year, even though payments were purportedly due upon customers' acceptance of the Telestone's products or service; (3) Telestone only invoiced customers after it received payment, purportedly for tax reasons, and its China-filed tax returns claimed far less revenues than its financial statements filed with the U.S. Securities and Exchange Commission; (4) as of December 31, 2009, over $26.6 million of the Telestone's accounts receivable were at least one year old, with the amounts increasing to $49.2 million and $66.6 million by December 31, 2010 and 2011, respectively; and (5) Telestone did not keep centralized records of its accounts receivable, and to obtain a purported accounting of its accounts receivable took two months' work from a 10-member team. (Id. ¶ 6).

According to the Complaint, the market gradually learned that there may have been an issue with Telestone's revenues when its accounts receivable ballooned, which resulted in the company's stock price declining during the Class Period from $2.48 to $2.01, or 19.0%, on May 15, 2012, $1.62 to $1.38, or 14.8%, on November 19, 2012, and from $0.84 to $0.30, or 64.2%, following resumption of trading after a trading halt on June 3, 2013. (Id. ¶¶ 38-40). Plaintiffs allege that as a result of the aforementioned wrongful acts and omissions, and the precipitous decline in the market value of the Telestone's securities, Class members have suffered significant losses and damages. Plaintiff Chao Sun therefore commenced case against Telestone on February 2, 2015. That same day, counsel for Plaintiff Sun published on Globe Newswire the first PSLRA notice announcing that a securities class action had been initiated against the defendants herein. ( See Cecchi Decl., ECF No. 6 at Exhibit A).

On April 3, 2015, five motions to appoint lead plaintiff and approve lead counsel were filed by various Plaintiffs. ( See ECF Nos. 5, 6, 7, 8, 9). Plaintiffs, Ting Xiong and Bruce Zurbrick/Zurbrick Family, each who filed the aforementioned motions, each filed notices which withdrew their respective Motions, (ECF Nos. 5, 7), and supported the appointment of Bin Qu as lead plaintiff. (Notice, ECF No. 10; Notice, ECF No. 13). Plaintiffs, Walter Aerts and Zhu Xi opposed Plaintiff, Bin Qu's Motion and argued that they in fact should be appointed lead plaintiffs (as they claim to be the presumptive lead plaintiffs) and thus their motion, (ECF No. 8), should be granted. The final moving Plaintiff, Joseph Hirsh, neither supported nor opposed any co-pending motion. In sum, the issue left for this Court is whether Bin Qu, or, Walter Aerts and Zhu Xi should serve as lead plaintiff(s).


The Private Securities Litigation Reform Act (hereinafter "PSLRA") sets forth procedures for the selection of Lead Plaintiff in class actions brought under the Exchange Act. The PSLRA directs courts to consider any motion to serve as Lead Plaintiff filed by class members in response to a published notice of class action by the latter of (i) 90 days after the date of publication, or (ii) as soon as practicable after the Court decides any pending motion to consolidate. 15 U.S.C. § 78u-4(a)(3)(B)(i) and (ii). The PSLRA provides a "rebuttable presumption" that the most "adequate plaintiff" to serve as Lead Plaintiff is the "person or group of persons" that:

(aa) has either filed the complaint or made a motion in response to a notice...;
(bb) in the determination of the Court, has the largest financial interest in the relief sought by the class; and
(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

15 U.S.C. § 78u-4(a)(3)(B)(iii). In deciding a motion to serve as lead plaintiff, the Court should limit its inquiry to the typicality and adequacy prongs of Rule 23(a), and defer examination of the remaining requirements until the Lead Plaintiff moves for class certification. See Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 924 (3d Cir. 1992); see also In re Nice Sys. Secs. Litig., 188 F.R.D. 206, 217 (D.N.J. 1999). The PSLRA vests authority in the lead ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.