NEW YORK, July 24, 2013 (GLOBE NEWSWIRE) -- Pomerantz Grossman Hufford Dahlstrom & Gross LLP announces the filing of a class action lawsuit against DNTW Chartered Accountants on behalf of Shareholders of Subaye, Inc. ("Subaye" or the "Company") (Nasdaq: SBAY ). The class action, filed in United States District Court, Southern District of New York, and docketed under 13-CIV-5120, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of Subaye between December 29, 2009 and April 7, 2011 both dates inclusive (the "Class Period"). This class action seeks to recover damages against the Company and certain of its officers and directors as a result of alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
If you are a shareholder who purchased Subaye securities during the Class Period, you have until September 3, 2013 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com . To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
DNTW is an auditing firm, headquartered in Markham Ontario Canada, with offices throughout Canada. During the Class Period, DNTW audited Subaye's annual reports filed on Forms 10-K with the SEC.
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: On December 12, 2010 Subaye filed its Form 10-K with the SEC for the fiscal year ended September 30, 2010. Included in the 10-K was DNTW's materially false and misleading clean audit report on Subaye's 2010 and 2009 financial statements. DNTW's audit reports were false when made because DNTW's audits of Subaye were not conducted "in accordance with the standards of the Public Company Accounting Oversight Board (United States)." Had DNTW conducted its audits in accordance with the PCAOB Rules (i.e. Generally Accepted Auditing Standards), DNTW could not have issued the clean audit reports it did, and would have discovered that Subaye's business was a fiction.
DNTW was aware that Subaye's business model continued to change, yet the business continued to purportedly grow revenue. For example, in 2010 Subaye claimed to have over 1,400 sales and marketing employees, and its purported revenues were $39 million, while it projected more than $71 million for 2011—a year in which it was planning to discontinue one business and shift into another; and DNTW was aware that Subaye had expensed $22 million—more than half of Subaye's revenues for 2010—as "marketing expenses."
DNTW also had access to, but turned a blind eye or recklessly disregarded the following: Subaye's headquarters was located in a building on the campus of a university, among student offices. The headquarters was essentially an empty office with no IT infrastructure; Subaye's customer list database was a fiction as nearly all of the listed customers were not paying customers or could not be verified; and Subaye has undisclosed material related party transactions in 2009 and 2010 that raised serious questions about the legitimacy of the Company's sales.
On January 19, 2011 the Public Company Accounting Oversight Board ("PCAOB") filed a settled action against James Crane, Subaye's CFO and Crane's audit firm J. Crane CPA, P.C. in connection with Crane and his firm's unwillingness to cooperate with the PCAOB and for failure to make required filings with the PCAOB. The Order also forbid Crane from serving as CFO of a public company—yet Crane continued as Subaye's CFO in violation of the PCAOB order.
On February 22, 2011 Subaye issued a press release announcing an update on the status of its quarterly filing. The announcement provided further details and reasons for the delayed 10-Q filing and false reassurances to investors. On this news, Subaye's shares declined $1.00 per share or 12% to close at $7.20 per share on February 22, 2011.
On March 14, 2011 the Company announced that Defendant Crane had resigned as the Company's CFO. On this news, the Company's stock fell $1.56 per share or 26% to close at $4.36 on March 15, 2011.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com .
Robert S. Willoughby Pomerantz Grossman Hufford Dahlstrom & Gross LLP
