Recovery over four times the class share
Background
W built his business in foreign trade in Southern California. Between 2020 and 2022 he bought shares of a China-based company listed in the U.S. in several purchases, with a peak position above $5 million. In March 2023 a short seller published a report claiming nearly half the company's revenue had been fabricated. The stock fell about 80% in two days, and W estimated his losses at roughly $4 million. Within two weeks, law firms had filed a class action. W received several letters saying "you don't need to do anything, just wait for the payout." He came to us to ask whether he really had to do nothing.
Challenges
- After legal fees, a class settlement divided by share count would return only about 5% of losses for a position of his size.
- An individual lawsuit has a high bar, and the complaint must be very specific.
- His position was large enough to justify a separate negotiation.
Strategy
- We kept W in the class for the time being to see how the defendants handled the first round. During that time we organized his three years of trades and the announcements he had reviewed, and calculated what he could recover.
- In September 2024 the court rejected most of the defendants' grounds for dismissal. In November 2024 we filed an individual suit in his name, based on facts substantially similar to those the court had just accepted. The filing also came before the limitations period expired on his earliest purchases.
- In October 2025 the class settlement received preliminary approval, and W opted out within the deadline. The defendants then had to negotiate with him individually.
- In April 2026 we took the statement of the former CFO, who admitted he had reported to management in 2021 that customer collections did not look right. In August, during mediation, that statement was on the table.
Case Timeline
| Date | Milestone |
|---|---|
| March 2023 | Short-seller report published; stock fell about 80% within two days; class action filed in federal district court |
| June 2023 | Court appointed an institutional investor as lead plaintiff; W retained Lingtu Law and remained in the class for the time being |
| September 2024 | Court rejected most of the defendants' grounds for dismissal |
| November 2024 | Lingtu Law filed an individual suit on W's behalf |
| October 2025 | Class settlement preliminarily approved; W opted out within the deadline |
| September 2026 | Individual settlement signed; amount roughly four times what he would have received from the class |
Outcome
In September 2026 the parties signed a settlement, and W received about $900,000. Had he shared in the class settlement, he would have received roughly $200,000.