NEW YORK--(BUSINESS WIRE)--Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, announces that a class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of investors that purchased Wins Finance Holdings, Inc. (NASDAQ: WINS) securities between October 31, 2018 and July 6, 2020 (the “Class Period”). Investors have until September 23, 2020 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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Wins, through its subsidiaries, purports to provide financing solutions for small and medium enterprises in the People’s Republic of China. The Company purports to offer financial guarantees, as well as financial leasing, advisory, consultancy, and agency services in Jinzhong City, Shanxi Province, and Beijing.
In 2014, Wins entered into a RMB 580 million credit agreement with Guohong Asset Management Co., Ltd. (the “Guohong Loan”), pursuant to which Guohong’s repayment was due to Wins in October 2019.
In September 2017, Wins engaged Centurion ZD CPA & Co. (“CZD”) as its independent registered public accounting firm after dismissing its previous accounting firm.
On October 31, 2019, Wins filed a notification of inability to timely file Form 20-F on Form NT 20-F with the Securities and Exchange Commission(“SEC”) (the “2019 NT 20-F”).
The following trading day, the Company’s stock price declined from $11.90 to $11.20, or 5.8%.
On November 19, 2019, Wins issued a press release announcing its receipt of a notification letter from the NASDAQ Listing Qualifications and its intent to submit a plan of compliance, adding that the filing of the 2019 20-F was untimely due to the uncertainty over recovery of the Guohong Loan but assuring investors that failure to collect on the loan would “not impact the Company’s ongoing operations.”
Then, on May 26, 2020, Wins issued a press release announcing that the Company received a delisting determination letter from Nasdaq. The press release stated, in relevant part, “[a]s disclosed previously, the Company is working assiduously to complete its delinquent filing with SEC and to regain compliance with the Nasdaq listing rule as soon as possible.”
On this news, Wins’s stock price closed at $7.81 per share on May 26, 2020, in contrast to its previous close of $10.06, a decline of 22.3%.
The Company’s undisclosed ongoing financial difficulties—including non-repayment of the Guohong Loan—and material control weaknesses came to a head on June 30, 2020, when CZD resigned as the Company’s independent auditor after less than three years in that role. On July 6, 2020, Wins issued a press release announcing CZD’s resignation.
On this news, Wins’s stock price fell $2.06 per share, or 6.1%, to close at $31.70 per share on July 7, 2020.
The Complaint, filed on July 24, 2020, alleges that throughout the Class Period defendants made materially false and misleading statements regarding the Company’s business, operational, and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) the ultimate repayment of the RMB 580 million Guohong Loan was highly uncertain; (ii) nonpayment of the Guohong Loan would have a significant impact on the Company’s financial and operating condition; (iii) weaknesses in Wins’s internal control over its financial reporting persisted despite the Company’s repeated assurances to investors that it was taking steps to remediate these weaknesses; (iv) the foregoing issues, among others, made the resignation of Wins’s independent auditor foreseeably likely; and (v) as a result, the Company’s public statements were materially false and misleading at all relevant times.
If you purchased Wins Finance securities during the Class Period, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Melissa Fortunato or Marion Passmore by email at email@example.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
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