Orchid Pavilion is facing the crisis of collective action of investors

As a result of the alleged beautification of the performance of the U.S. listed in June this year, the Chinese Business Enterprise Orchid Pavilion is facing the crisis of class action by investors, and the other faces a class action is PetroChina, because of the recent exposure of the corruption nest case. A US law firm has launched a class action lawsuit on behalf of some investors in U.S. courts, accusing PetroChina and some of its executives of failing to disclose their internal corruption to investors, and asking PetroChina to compensate for the loss of shares caused by the corruption scandal.

Two consecutive Chinese concept stocks (PetroChina except listed in Hong Kong and Shanghai) also listed in New York through depository vouchers are sued by investors, once again the collective action in the United States, European markets are often used by investors, consumers to protect their rights and interests of the litigation system pushed to the front, triggering domestic investors, consumers of high concern. Because, in this period, a-share market on the Everbright "Oolong refers to" incident, but the loss of many investors, but because of the absence of collective litigation system, facing the embarrassment of no door.

After the "Oolong finger" event in Everbright, calls for China to introduce a collective action system as soon as possible, so that the vast number of investors, consumers (melamine incident, the vast number of consumers because there is no collective litigation system and not good to defend their own rights and interests) can better use of legal weapons to safeguard their own rights and interests.

The robbery of class action

As the first listed in the United States this year, the Chinese concept shares, Orchid Pavilion is the overseas wedding market for the main business of B 2C (Foreign trade), after the listing was once sought after investors, a short two months share price doubled. However, with the announcement of the second-quarter results of the pavilion, its share price suffered a cliff-slump as its performance was far less than expected in previous IPO filings.

In the A-share market, stock prices plummeted, investors can only consider themselves unlucky, or choose to die to wait for the price rebound, or choose to cut the meat off the field. However, in the United States, because of the collective action to protect the legitimate interests of investors in the system, investors can choose to pass the collective action to the wrong listed companies to claim. This time, the Orchid Pavilion set potential is the target of the investor collective action.

The so-called class action, that is, the majority of members of the common interests of each other, because too many people can not be sued by the whole, one or several of them for the interests of all prosecution or litigation. This lawsuit is more than the current consumption (such as consumer action against tobacco companies), investment (such as shareholders on the listed companies litigation), public transport and other fields (such as air crash victims of the airline lawsuit) and so on. Participation in class action, the plaintiff does not need to spend legal fees, but the lawyer bear, if successful, the lawyer can be divided by about 30% of the compensation.

June 6, when the Blue Pavilion set the potential of C E o Guo to the Nasdaq sounded on the clock, he may not have expected, orchid Pavilion set of shares in the first three trading days to achieve a cumulative 54% of the gains, but also dare not predict the two-month period can double the share price ( Orchid Pavilion Set potential of 9.5 U.S. dollars, August 14, orchid Pavilion set potential stock climbed to 23.38 U.S. dollars this highest price. As this year's first landing in the U.S. stock market in the stocks, Orchid Pavilion set potential for a time to become a star in the stock.

Guo went to a media group in August, revealed that the Orchid Pavilion collection was nearly 10 times times the excess subscription. For a successful IPO and oversubscribed, Guo said, "The most important thing is not to tell the story to investors, but to solve two things: first, let the investors feel that you can be trusted, everything is frank communication, and the second is to let investors feel that you have the potential to continue to develop." "For pricing, Guo went on to stress," what is the benefit of more than 1 dollars? Can you get more meat? N O, so fluctuation, the most important thing is to do a successful listing, the back up a 20%, we all H appy, more than 1 U.S. dollars finally fell in the crash, the next day was a person accused of good. ”

When he was very proud, Guo went to sum up the success of the Orchid Pavilion three points: one is the business model, Orchid Pavilion is rooted in China, but through the Internet to achieve the success of the world market; The second is the supply chain, Guo said, before the Orchid Pavilion, no company can make a mass customization wedding dress; Three is data, all decisions have to " By the data, one of the most frequently cited examples is, Orchid Pavilion order to help the wedding small factory in Jiangsu and Zhejiang area to improve the management and production processes, so that they become adaptable to the needs of the electrical business Factory, the details include the processing method is 4 or 5 people, how to call the platform design, how to do a better division of labor.

Orchid Pavilion Set potential internal to Guo to disease evaluation is "mathematician". It has been reported that Guo went to the degree of "superstitious" data to the extent that every day its read mail 80% is machine issued. "I don't read emails because people write emails with stories and no stories to tell. ”

LAN Pavilion set potential listing two-month share price doubled, everyone is h a ppy, but let Guo go to disease unexpectedly is, "data" looks abandoned him ―――8 month 2 0 days, Orchid Pavilion set potential share price plunged 39.9%, after repeatedly fell, August 30, 9.67 dollars, the issue of the IPO, really fell a "splinters." Since then, the Orchid Pavilion set potential stock prices gradually rebounded slightly, as of the Friday Close, Orchid Pavilion set potential 10, 42 U.S. dollars, compared to 23.38 U.S. dollars, the highest price, the decline of more than 55%. With the stock price back to the starting point, the Orchid Pavilion set momentum on the star Halo, has subsided.

The trigger for the cliff-style fall of the Orchid Pavilion is its 2013 second-quarter results, released on August 19. The results showed the net revenue of the pavilion in the second quarter was 72.2 million U.S. dollars, an increase of 53% per cent, net profit of 600,000 U.S. dollars, and the first quarter of this year, the Orchid Pavilion revenue growth rate of 100%. To the dismay of investors, the pavilion is expected to further reduce its third-quarter revenue growth to 33% to 37%. Earlier, media reports said that the Orchid Pavilion set in the IPO roadshow, this year's revenue growth target set to 64%. If this report is true, then, to complete the 64% revenue growth target, the Orchid Pavilion four quarter revenue increase growth needs to reach 90%. This is an almost impossible task for the Orchid Pavilion, which is fast declining revenue growth.

Zhang Zhouping, senior analyst at the China Electronic Commerce Research Center, said in an interview with reporters in South Africa that the main business of the Pavilion is concentrated in North America, which has developed steadily over the past few years, so it is unlikely to explode in the fourth quarter. Unless it opens up new markets that can produce explosive growth, the odds are slim.

Chinese and American lawyers at both ends

Share prices have been singing the momentum, because the two-quarter earnings release and screeching stop, and within a week to fall back to the original point, which makes those who buy high buyers heavy losses.

"If the Orchid Pavilion is a A-share listed company, then the shareholders chasing high losses, can only consider themselves unlucky." But in the U.S. capital markets, shareholders have the weapon of collective action. As long as there are indications that listed companies in the disclosure of information is not in place, triggering stock price fluctuations, can be through collective action, let listed companies to pay for losses. "Multinational securities claims lawyer Jun Junbo told South reporters.

August 27, the United States, four law firms also issued a notice that has been to the Federal District Court of southern New York to launch a class action, accusing Orchid Pavilion set potential issued a series of substantive errors and misleading information, beautify the company's financial performance and performance prospects, to the investors caused losses.

According to a public indictment, the law firm pointed out that the pavilion was in an IPO with false and misleading statements. Orchid Pavilion IPO occurred in the second quarter of the past 2/3, when the pavilion does not reveal the company's clothing sector, especially wedding and evening dress sales have been falling, and failed to meet the expectations of investors announced earlier, These significant misleading information artificially inflated the stock price of the former Orchid Pavilion after the listing to the second quarter report. The indictment alleges that these actions violate the regulations of the U.S. Securities Exchange Act of 1934. The indictment said that from now on from June 6 to August 19 in the second quarter of the disclosure of the shares of the Orchid Pavilion stock investors. The firm will collect investor information in the next two months, or before October 28.

Not only are American lawyers suing Orchid Pavilion, Chinese lawyers are also joining the lawsuit against the Orchid Pavilion collection. With more and more domestic investors buying U.S. stocks through a variety of channels, the pavilion's share price plunged and domestic investors suffered. Jun Junbo, the first person to be called China's multinational securities claim, also publicly solicited claims for Chinese shareholders who lost more than 50,000 dollars on sites such as Snowball on August 28.

"So far, we have recruited 4 shareholders, the collection of information mainly includes transactions and other information, including the transaction time, price, the loss caused by this incident." If the loss reaches more than 50,000 dollars, it may become a plaintiff. After the collection, select the most lost shareholders to apply to become the chief plaintiff, if the application was approved the lawsuit can be carried out. Jun Junbo reporters pointed out that if the law firm represents a shareholder loss is not big enough, not appointed as the chief plaintiff, then the lawyer will not be able to participate in the lawsuit. "So, the case is ultimately by which lawyer to represent, who will be the chief plaintiff is now undecided." ”

Question on the growth of Orchid Pavilion's potential

For the group lawsuit from the other side of the ocean, the Orchid Pavilion set out a statement before the opening of the U.S. stock markets on August 28 that it had taken note of the group action initiated by the law, which the company said lacked legal basis. At present, the company plans to work with its external legal advisers to protect their interests.