In re Longtop Financial Technologies Limited Securities Litigation

History of Case

This is a securities class action lawsuit against Longtop Financial Technologies Ltd. and certain other defendants, including Derek Palaschuk (the “Settling Defendant”), for alleged violations of the Federal Securities Laws during the Class Period.

Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York presides over this case and has appointed Dankse Invest Management A/S and Pension Fund of Local No. One I.A.T.S.E. to serve as “Lead Plaintiffs.”

The proposed Settlement between Lead Plaintiffs and the Settling Defendant follows the November 2014 trial against Palaschuk, whereby a jury found Palaschuk liable for violating Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) between February 10, 2010 and May 17, 2011, and apportioned responsibility for total damages amongst defendants as follows: 50% to Wai Chau Lin a/k/a Lian Weizhou (“Lin”), 49% to Longtop, and 1% to Palaschuk.

In addition to the jury verdict against Palaschuk, the Court previously entered a default judgment against Longtop and Lin, for violating Sections 10(b) and 20(a) of the Exchange Act between February 21, 2008 and May 11, 2011. Pursuant to the default judgment, Longtop and Lin are jointly and severally liable to Lead Plaintiffs and the Class for damages totaling $882,300,000 plus 9% interest on such amount from February 21, 2008, though the date of payment. This amount is the maximum amount of damages available to the Class. Lead Plaintiffs’ efforts to collect this judgment remain ongoing; however, given the complexities of the international laws implicate, Longtop’s corporate structure and its potential lack of financial resources, the likelihood that Lead Plaintiffs collecting this judgment or any portion thereof is uncertain.

On June 23, 2015, the Court preliminarily approved the proposed Settlement between Lead Plaintiffs and Palaschuk. The Settlement consists of $2,300,000.00 in cash, plus any interest earned thereon, in exchange for the release of all claims asserted against Palachuk in the action. A portion of the Settlement proceeds will be used to pay the expenses of Lead Counsel and Lead Plaintiffs awarded by the Court, to pay for notice of the proposed Settlement to the Class and the processing of claims submitted by Class Members, and to pay Taxes and Tax Expenses. The balance of the Settlement Fund (the “Net Settlement Fund”) will be distributed, in accordance with the Court-approved Plan of Allocation, to Class Members who submit valid and timely Proof of Claim and Release forms. If the Settlement is approved, it will resolve all claims in the action by Class Members against the Settling Defendant.