SkyPeople (NASDAQ: SPU) Expert Report On Market Efficiency

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Case 1:11-cv-02700-PKC Document 118-1 Filed 06/28/13 Page 1 of 111

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ZACHARY LEWY, J OHN LEE, ERIC KLEMENT,
AND BENJ AMIN L. PADNOS, INDIVIDUALLY
AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED,
Plaintiffs,
vs.
SKYPEOPLE FRUIT J UICE, INC., RODMAN &
RENSHAW, LLC, BDO LIMITED, CHILD, VAN
WAGONER & BRADSHAW, PLLC, YONGKE
XUE, HONGKE XUE, XIAOQIN Y AN, SPRING
LIU, NORMAN KO, GUOLIN WANG, ROBERT B.
FIELDS, AND J OHN SMAGULA,
Defendants.
Civil Action No. 11-cv-2700 (PKC)
EXPERT REPORT ON MARKET EFFICIENCY
Gang Hu, Ph.D., CFA
J une 28, 2013
TABLE OF CONTENTS
INTRODUCTION AND SCOPE ................................................................................................... 1
CREDENTIALS ............................................................................................................................. 1
CONCLUSIONS............................................................................................................................. 3
FACTUAL BACKGROUND ......................................................................................................... 3
About the Company .................................................................................................................... 3
EFFICIENT MARKET DEFINED ................................................................................................. 4
TheCammer Factors ............................................................................................................... 6
EFFICIENCY OF THE MARKET FOR SKYPEOPLE COMMON STOCK ............................... 8
Trading Volume .......................................................................................................................... 8
Analyst Coverage and Other Avenues of Information Dissemination ....................................... 9
Traditional Sell-Side Analyst Coverage ................................................................................. 9
Institutional Ownership and Buy-Side Analysts ..................................................................... 9
Other Avenues of Information Dissemination ...................................................................... 10
Market Makers .......................................................................................................................... 11
S-3 Registration Eligibility ....................................................................................................... 12
EMPIRICAL EVIDENCE OF SKYPEOPLE MARKET EFFICIENCY .................................... 13
F-Test and Ansari-Bradley Volatility Test Conducted on Earnings Announcements .............. 15
Earnings Announcement Dates ............................................................................................. 16
F-Test ........................................................................................................................................ 17
Ansari-Bradley Test .................................................................................................................. 18
Event Study ............................................................................................................................... 19
Selection of Events ............................................................................................................... 21
Isolating the Impact of Company-Specific Information ....................................................... 22
Regression Results ................................................................................................................ 23
t-test....................................................................................................................................... 24
Event Study Results .................................................................................................................. 24
April 1, 2011 ......................................................................................................................... 24
J une 1, 2011 .......................................................................................................................... 26
Event Study Summary .......................................................................................................... 27
Empirical Analysis Summary ................................................................................................... 27
SUMMARY .................................................................................................................................. 27
LIMITING FACTORS ................................................................................................................. 28
APPENDIX-1: LOGARITHMIC RETURNS .............................................................................. 29
INTRODUCTION AND SCOPE
1. I was asked by The Rosen Law Firm P.A., counsel for the Plaintiffs, to determine whether
the common stock of SkyPeople Fruit J uice, Inc. (SkyPeople or the Company) traded
in an efficient market during the Class Period, March 31, 2010 to J une 1, 2011.
2. I analyzed the market for SkyPeople common stock, the price behavior of the stock, and the
factors that are generally accepted to be indicative of market efficiency. I examined
Company press releases, conference call transcripts, equity analyst reports, news articles,
SEC filings, trading volume, the performance of the overall stock market, and the
performance of SkyPeoples peer group, as well as other pertinent data and documents. I
also read Plaintiffs Consolidated Amended Class Action Complaint (Complaint) dated
November 28, 2011, and analyzed the allegations therein. Exhibit-1 lists the documents I
reviewed and relied upon in the course of this engagement.
3. This report presents my methodology, findings, and conclusions.
4. I understand that discovery is ongoing in this case. I reserve the right, in my sole discretion,
to make any corrections or additions to my report, and to modify my opinion, should any
new or additional evidence become available.
CREDENTIALS
5. I am a tenured Associate Professor of Finance at Babson College where I hold the Zwerling
Family Endowed Term Chair in Finance. Previously, I held the Fidelity Term Chair.
6. I hold a Ph.D. in Finance from Boston College, and a Bachelors degree in System
Engineering from Tianjin University, China. I also hold the Chartered Financial Analyst
(CFA) designation, granted by the CFA Institute.
7. I have published extensively in the field of finance. My papers have been published in
major finance academic journals, well-known practitioner outlets, and books, including
Journal of Financial Economics, Review of Financial Studies, Journal of Financial and
Quantitative Analysis, Journal of Corporate Finance, Journal of Financial Markets,
Journal of Financial Intermediation, Journal of Business Finance and Accounting, Journal
of Financial Research, Financial Analysts Journal, Journal of Trading, Law360, and a
1
book chapter published by the Brookings Institution. I have an article forthcoming in
Journal of Forensic Economics. My earlier research in the fields of operations research and
mathematics has been published in European Journal of Operational Research and Applied
Mathematics Letters.
8. My research has been presented at more than 40 national and international conferences,
including the American Finance Association, the National Bureau of Economic Research,
the Western Finance Association, and the American Accounting Association annual
meetings. My research has been cited in SEC Chairmans response letter to an inquiry by
Congress, and featured in the Harvard Law School Forum on Corporate Governance and
Financial Regulation.
9. I am a founder of the Boston Area Finance Symposium, an annual finance conference
among Boston-area academic institutions including Babson College, Bentley University,
Brandeis University, Northeastern University, University of Massachusetts Amherst, and
University of Rhode Island. I currently serve on the symposiums organizing committee. I
have been selected to review papers for numerous finance journals, and I have reviewed
finance textbook manuscripts.
10. At Babson College, I have taught numerous finance classes, organized the finance seminar
series, and advised several honors theses focusing on domestic and foreign financial
markets.
11. Prior to my joining the faculty at Babson College, I worked as a Quantitative Trade Analyst
at Fidelity Management & Research Company in Boston, MA. I worked on equity trading
techniques, broker relationships, and trading costs measurement in Fidelitys Global Equity
Trading group.
12. I am a member of the American Finance Association, the Western Finance Association, the
Financial Management Association, the Eastern Finance Association, the Southern Finance
Association, the Boston Security Analysts Society, The Chinese Finance Association, and
the CFA Institute.
13. The CFA designation is the premier credential for financial analysts worldwide. In order to
receive this credential, applicants must pass a series of three exams covering such topics as
economics, equity analysis, financial valuation, business analysis, quantitative methods,
investment analysis, portfolio management, risk management, financial accounting, and
2
ethical and professional standards. To be granted the CFA charter, one also needs to
accumulate sufficient relevant work experience in the financial industry.
14. My curriculum vitae is attached as Exhibit-2. I do not have any prior testimony
appearances over the past four years.
15. I am an affiliated expert with Crowninshield Financial Research, a financial economics
consulting firm, which receives compensation for the work performed by me and the
analysts who assist me on this case. Crowninshield is being compensated at a rate of $450
per hour for my work on this matter. In accordance with recognized professional ethics, my
professional fees for this service are not contingent upon the opinions expressed herein. I
have no present or intended financial interest in the outcome of this matter.
CONCLUSIONS
16. SkyPeople common stock traded in an efficient market over the course of the Class Period.
17. Statistical tests prove that there was a cause-and-effect relationship between the release of
new material information and movements in the SkyPeople common stock price during the
Class Period. In addition, event study analysis proves that SkyPeople common stock
reacted in a statistically significant fashion on the allegedly corrective disclosure dates. The
results of the event study show that SkyPeoples common stock exhibited a cause-and-
effect relationship with respect to the particular information at issue in this case. The
results of both tests establish that SkyPeople common stock satisfied the empirical Cammer
factor, widely-recognized as the most important factor.
18. SkyPeople common stock satisfied most of the remaining Cammer factors, which,
consistent with financial economic principles and empirical research, indicates market
efficiency.
FACTUAL BACKGROUND
About the Company
19. Throughout the Class Period, SkyPeople was a holding company incorporated in Florida,
with two direct wholly owned subsidiaries: Pacific Industry Holding Group Co., Ltd.,
3
(Pacific) and Harmony MN Inc., (Harmony).
1
Pacific held a 99.78% equity interest in
SkyPeople (China), which was based in the Peoples Republic of China (PRC).
2
Through its indirect ownership of SkyPeople (China), the Company was primarily in the
business of producing and selling fruit juice concentrate (60% of the Companys revenues
in 2010), fruit beverages (24% of the Companys revenues in 2010), and other fruit-related
products (16% of the Companys revenues in 2010) in and from the PRC.
3
20. The Company reported revenues of $59.25 million and $93.25 million for the fiscal years
2009 and 2010, respectively.
4
For the fiscal years 2009 and 2010 the Company reported
net income of $16.40 million and $22.97 million, respectively.
5
According to SkyPeoples
10-K filing, in 2009 and 2010 SkyPeople China accounted for 92.6% and 92.2% of the
Company net income.
6
21. As of the close of trading on March 31, 2010, the first day of the Class Period, SkyPeoples
market capitalization (the aggregate value of all outstanding shares), was $118.42 million.
7
The market capitalization climbed to a Class Period high of $143.13 million on April 14,
2010. By J une 2, 2011, the first day after the end of the Class Period, the Companys
market capitalization had fallen to $43.57 million. This drop represents a decline of 69.5%
from the Class Period high.
22. The peak stock price during the Class Period was $7.24 per share on November 10, 2010.
By J une 2, 2011, SkyPeoples stock price had fallen to $2.16 per share. This drop
represents a decline of 70.2% from the Class Period high.
EFFICIENT MARKET DEFINED
23. The definition of market efficiency set forth by J udge Alfred J . Lechner, J r. in the 1989
Cammer v. Bloom decision is often cited as a legal authority on the meaning of market
efficiency:
1
SkyPeople Fruit J uice, Inc. Form 10-K for the Fiscal Year Ended December 31, 2010, filed April 1, 2011, p. 2.
2
3
4
SkyPeople Fruit J uice, Inc. Form 10-K for the Fiscal Year Ended December 31, 2010, filed April 1, 2011, F-3.
5
6
7
Share price data obtained from the Center for Research in Security Prices (CRSP). Shares outstanding data
obtained from SkyPeople SEC filings.
4
As relevant here, courts have permitted a rebuttable presumption of
reliance in the case of securities traded in efficient markets (i.e., markets
which are so active and followed that material information disclosed by a
company is expected to be reflected in the stock price).
Cammer v. Bloom, 711 F. Supp. 1264, 1273 (D.N.J. 1989) (parentheses as in original).
24. J udge Lechner also cited the definitions offered by commentators Alan R. Bromberg and
Lewis D. Lowenfels, and by finance professor Eugene Fama:
An efficient market is one which rapidly reflects new information in
price.
Bromberg and Lowenfels, cited in the Cammer Opinion, 711 F. Supp. at p. 1276.
A market in which prices always fully reflect available information is
called efficient.
Fama, Efficient Capital Markets: A Review of Theory and Empirical Work,
Journal of Finance, 1970, cited in Cammer, 711 F. Supp. at 1280.
25. The Supreme Court in the Basic v. Levinson decision focused on the same important
characteristic at the heart of these definitions of market efficiency:
The fraud on the market theory is based on the hypothesis that, in an
open and developed securities market, the price of a companys stock is
determined by the available material information regarding the company
and its business
Basic Inc. v. Levinson, 485 U.S. 224, 240-41 (1988)(quoted in Cammer, 711 F. Supp.
1276).
26. The recent Amgen decision defined market efficiency similarly:
The fraud-on-the market premise is that the price of a security traded in
an efficient market will reflect all publicly available information about a
company;
Amgen Inc., v. Connecticut Retirement Plans, 133 S. Ct. 1184, 1190 (2013).
27. The recent Halliburton decision cited Basics definition of market efficiency, and
emphasized that in an efficient market a securitys price also reflects misrepresentations
and public misstatements, as it reflects all publicly available information:
According to that theory [the fraud-on-the-market theory], the market
price of shares traded on well-developed markets reflects all publicly
available information, and, hence, any material misrepresentations. Under
5
that doctrine, the Court explained, one can assume an investor relies on
public misstatements whenever he buys or sells stock at the price set by
the market.
Erica P. John Fund, Inc. v. Halliburton Co., 133 S. Ct. 2179, 2181-2182 (internal
citations omitted).
28. An efficient market, as defined by Cammer, Basic, Amgen, andHalliburton, is consistent
with the definition generally accepted in the academic finance community; according to
Bromberg and Lowenfels, and Fama, an efficient market is a market in which available
information is rapidly incorporated into the prices of securities such that the trading price
reflects all available information.
29. Market efficiency is relevant to a securities case as it addresses the question of whether or
not false information (whether in the form of an alleged misrepresentation or omission)
would likely have an impact on the prices at which investors bought and sold.
TheCammer Factors
30. Cammer lays out five factors that are used in determining whether the market for a security
is efficient. The five factors are: 1) trading volume, 2) coverage by securities analysts, 3)
number of market makers, 4) eligibility for S-3 registration, and 5) empirical evidence that
the security price reacts to material information. Economic rationales support each factor as
an indicator of market efficiency.
31. Empirical research has confirmed that volume, number of market makers, and analyst
coverage are indicative of market efficiency:
Consistent with the efficiency indicators used recently by the courts, the
inefficient firms have lower mean trading volume, fewer market makers,
lower analyst following, and lower institutional ownership (number and
percentage) than efficient firms.
The Fraud-on-the-Market Theory and the Indicators of Common Stock
Efficiency, by Brad M. Barber, Paul A. Griffin, and Baruch Lev, Journal of
Corporation Law, 1994, p. 302.
32. With respect to the empirical factor, Barber, et al. used empirical tests as the standard for
market efficiency by which to judge the significance of the other variables. Consequently,
they acknowledge the importance of the empirical factor.
6
33. Consistent with financial economic theory and empirical research, the language used by the
Cammer Court describes the factors not as five necessary factors, but rather as indicative of
the degree to which the security market is expected to be efficient:
There are several different characteristics pertaining to the markets for
individual stocks which are probative of the degree to which the purchase
price of a stock should reflect material company disclosures.
Cammer, 711 F. Supp. at 1283.
34. TheCammer opinion describes the nature of the five factors as follows:
First, plaintiffs could have alleged there existed an average weekly
trading volume during the class period in excess of a certain number of
shares.
Cammer Opinion, 711 F. Supp. at 1286.
Second, it would be persuasive to allege a significant number of
securities analysts followed and reported on a companys stock during the
class period.
Third, it could be alleged the stock had numerous market makers.
Fourth, as discussed it would be helpful to allege the Company was
entitled to file an S-3 Registration in connection with public offerings
Finally, it would be helpful to a plaintiff seeking to allege an efficient
market to allege empirical facts showing a cause and effect relationship
between unexpected corporate events or financial releases and an
immediate response in the stock price.
As previously noted, one of the most convincing ways to demonstrate
efficiency would be to illustrate over time, a cause and effect relationship
between company disclosures and resulting movements in stock price.
35. In the sections that follow I analyze each of the five Cammer factors to determine whether
the market for SkyPeople common stock was efficient during the Class Period.
7
EFFICIENCY OF THE MARKET FOR SKYPEOPLE COMMON STOCK
36. To assess whether the market for SkyPeople common stock was an efficient market, I
analyzed the market and behavior of SkyPeople common stock, focusing on the five
factors, cited in Cammer, that are generally accepted to be indicative of market efficiency
for a publicly traded security.
Trading Volume
37. Throughout the Class Period, SkyPeople common stock traded regularly and actively. On
average, over 157,363 shares changed hands daily.
8
On one day, August 25, 2010, over 2
million shares traded. SkyPeople common stock trading data is presented in Exhibit-3.
38. In addition to average daily trading volume, another volume metric to consider in
determining market efficiency is the percentage of outstanding shares that turn over each
week. During the Class Period, the average weekly trading volume was 3.96% of shares
outstanding.
9
This level of trading activity is above levels accepted by courts as being
indicative of market efficiency for common stocks.
10
In the case of the common stock of
Coated Sales, Inc., the Cammer Court cited the conclusion of Alan R. Bromberg and Lewis
D. Lowenfels that weekly trading of 2% or more of the outstanding shares would justify a
strong presumption that the market for the security is an efficient one; 1% would justify a
substantial presumption.
11
Trading volume for SkyPeople common stock during the Class
Period was well above the threshold for a strong presumption of market efficiency.
39. Both in terms of average daily trading volume and also on the basis of the percentage of
outstanding shares traded weekly, the market for SkyPeople common stock was active.
Consistent with the Cammer opinion and economic theory, the active trading volume in
SkyPeople common stock is strong evidence of the efficiency of the market for that
security over the course of the Class Period.
8
Financial data provided by CRSP.
9
Estimated by dividing the average daily volume by the average number of shares outstanding, times 5 (the number
of trading days in a typical week).
10
Cammer Opinion, 711 F. Supp. at p. 1286.
11
Ibid., at p. 1293.
8
Analyst Coverage and Other Avenues of Information Dissemination
Traditional Sell-Side Analyst Coverage
40. Securities analysts disseminate and interpret information about the companies they cover.
They conduct research and provide valuation opinions, helping market participants acquire
relevant information and understand the implications of that information for valuation and
investment decisions. Consequently, securities analysts facilitate the flow of information
and the digestion of information within the marketplace. These functions promote market
efficiency.
41. SkyPeople was the subject of analyst coverage during the Class Period. I obtained and
reviewed analyst reports on SkyPeople from the Thomson Research database published
during the Class Period by Roth Capital Partners. In total, I obtained 12 reports published
by Roth Capital Partners during the Class Period. Notably, Roth Capital Partners published
reports on SkyPeople throughout the Class Period, beginning April 1, 2010 through May
18, 2011.
12
42. A review of news articles during the Class Period as well as investment message boards
indicated that at least one additional analyst, Absaroka Capital Management, covered
SkyPeople. I reviewed the Absaroka Capital Management report and determined that it
contained valuation-relevant analysis and recommendations.
43. Analysts were evaluating SkyPeople and making their research available to investors.
Consistent with the Cammer opinion and financial economic principles, the coverage of
SkyPeople by professional securities analysts is evidence of the efficiency of the market for
SkyPeople common stock during the Class Period.
Institutional Ownership and Buy-Side Analysts
44. Vickers Stock Research Corporation (Vickers) provides data on institutional ownership
of SkyPeople common stock. The data is compiled from the 13-F filings that major
investment institutions are required to submit to the SEC. Major institutions are defined as
firms or individuals that exercise investment discretion over the assets of others in excess
of $100 million. Large investment firms generally employ financial analysts who conduct
12
SPU: 4Q Beat; Positive Outlook; Maintain Buy/PT, by Howard Zhou and Rachel Du, Roth Capital Partners,
analyst report, April 1, 2011; and SPU: Concentrate Sales to Slow; Cautious on Beverage Outlook, by Howard
Zhou and Nick Ning, Roth Capital Partners, analyst report, May 18, 2011.
9
their own research on the stocks they buy. According to the Vickers data, at least 51 major
institutions owned SkyPeople common stock during the Class Period.
13
During the Class
Period, institutional holdings averaged 16.50% and 40.76% of shares outstanding and
public float, respectively.
Other Avenues of Information Dissemination
45. In addition, SkyPeople was the subject of two published articles on the investment analysis
websiteSeeking Alpha during the Class Period.
14
Though these reports are not published
by traditional sell-side analysts, they are publicly-available, widely-disseminated, and
contain value-relevant information including buy/sell recommendations.
46. TheCammer decision dates back to 1989, now 24 years ago. The world of information
availability, including pertaining to investment research and analysis, is very different than
it was in the late 80s. Nowadays, the average investor is more likely to seek out financial
blogs and internet-only pieces than traditional analyst reports. Many financial blogs,
includingSeeking Alpha, have become leading disseminators of financial information,
supplementing or replacing traditional sell-side equity analyst reports for some investors.
These new channels of information dissemination help promote market efficiency for many
securities.
47. Financial academics have long recognized the importance of information published on
financial websites to the stock market. As far back as the early 2000s, researchers
understood the relationship between online postings and abnormal stock price returns.
15
More recently, research has shown that published investment analysis on finance-oriented
websites such as Seeking Alpha conveys information to the market and impacts stock
prices:
13
At least 51 institutions held SkyPeople common stock according to filings that reported holdings quarterly from
March 31, 2010 through March 31, 2011. Additional institutions may have held SkyPeople common stock during
the Class Period, though not on the quarterly reporting dates.
14
SkyPeople Fruit J uice: Sky High Stock Opportunity for Value Investors, December 21, 2010, by Andy Li
(http://seekingalpha.com/article/242974-skypeople-fruit-juice-sky-high-stock-opportunity-for-value-investors), and
SkyPeople: Strong Potential for Fruitful Returns, April 14, 2011, by China Economic Review
(http://seekingalpha.com/article/263641-skypeople-strong-potential-for-fruitful-returns).
15
Internet Message Board Activity and Market Efficiency: A Case Study of the Internet Service Sector using
RagingBull.com, by Robert Tumarkin, Financial Markets, Institutions & Instruments, volume 11, issue 4,
November 2002.
10
Specifically, we detect a strong link between the views expressed on
[Seeking Alpha] and contemporaneous and subsequent stock returns. This
link is stronger for articles that receive more attention and for companies
likely to be neglected by traditional advice sources. The views expressed
on SA also predict earnings surprises, suggesting that this form of peer-
based advice not only affects investor behavior, but also provides
meaningful information with regard to company fundamentals.
Customers As Advisors: The Role of Social Media in Financial Markets, by Chen,
et al., Working Paper, April 9, 2012, p. 2.
48. Thus, SkyPeople was known in the investment community, covered by both traditional
sell-side analysts and buy-side analysts, and followed in leading financial blogs such as
Seeking Alpha. These facts support a finding that the market for SkyPeople common stock
was an efficient market during the Class Period.
Market Makers
49. The number of market makers is one of the factors the Cammer Court determined indicates
market efficiency. The company that was the subject of the lawsuit in the Cammer case
was Coated Sales, Inc., which was listed on the NASDAQ stock exchange. The NASDAQ
is an electronic exchange that makes use of multiple competing market makers. Market
makers are financial intermediaries who trade in a particular security, standing ready to buy
and sell with investors and institutions. Consequently, for a NASDAQ-listed stock, a large
number of market makers indicates that there are many market participants trading that
particular stock. A large number of market makers also indicates that there is a high degree
of liquidity. With a large number of market makers it is generally easy for investors to
execute trades in a timely fashion with reasonable transaction costs.
50. For the majority of the Class Period, SkyPeople common stock was listed on the NASDAQ
exchange and is still listed on the NASDAQ.
16
Cammer explicitly acknowledged the
importance of a NASDAQ listing and the implications of such a listing on market
efficiency, citing Bromberg and Lowenfels:
16
SkyPeoples common stock began trading on the NASDAQ on April 20, 2010, immediately prior to that the
Companys common stock traded on the NYSE Amex (SkyPeople Fruit J uice, Inc. Form 10-K for the Fiscal Year
Ended December 31, 2010, filed April 1, 2011, p. 29.).
11
We think that, at a minimum, there should be a presumption probably
conditional for class determination that certain markets are developed
and efficient for virtually all the securities traded there: the New York and
American Stock Exchanges, the Chicago Board Options Exchange and the
NASDAQ National Market System.
Bromberg and Lowenfels, cited in Cammer, 711 F. Supp. at 1292.
51. During the Class Period, according to Bloomberg, there were at least 155 market makers
for SkyPeople common stock. Some of the market makers included: Barclays Capital;
Citigroup Global Markets; Goldman Sachs; J PMorgan; Merrill Lynch; Morgan Stanley;
and UBS. A complete list of market makers for SkyPeople common stock during the Class
Period is presented in Exhibit-4.
52. That SkyPeople common stock traded on the NASDAQ and that numerous financial
institutions also served as market makers are strong evidence that SkyPeople common
stock traded in an efficient market.
S-3 Registration Eligibility
53. TheCammer opinion noted that S-3 registration supports market efficiency because a
company is entitled to S-3 registration when, among other things, it has filed Exchange Act
reports for a specified length of time, has outstanding float above a certain value, and for
smaller companies, has trading volume above a certain level. At the time of the Cammer
opinion, the conditions for S-3 registration were that a company filed financial reports with
the SEC for 36 months, and had outstanding float over $150 million held by non-affiliates,
or $100 million of such float coupled with annual trading volume exceeding 3 million
shares. The Cammer court noted that the filing requirement ensured that financial data was
available to market participants, and the size and volume requirements indicated that many
market participants would have examined the information.
Proposed Form S-3 recognizes the applicability of the efficient market
theory to the registration statement framework with respect to those
registrants which usually provide high quality corporate reports, including
Exchange Act reports, and whose corporate information is broadly
disseminated, because such companies are widely followed by
12
professional analysts and investors in the market place. Because of the
foregoing observations made by the SEC, the existence of Form S-3 status
is an important factor weighing in favor of a finding that a market is
efficient.
Cammer Opinion, 711 F. Supp. at pp. 1284-1285.
The public float aspect of the Form S-3 requirements ensures that
enough investors have in fact read the previously filed document.
Again, it is the number of shares traded and value of shares outstanding
that involve the facts which imply efficiency.
54. The SEC has now determined that companies need not have a float that is greater than $75
million if, among other conditions, it has a class of common equity listed on a national
securities exchange, is not a shell company, is current in its filings, and has made timely
filings for the previous 12 months.
17
55. The SEC has made these changes because it recognizes that the internet has vastly
increased the amount of data available and disseminated to investors.
18
Thus, the SEC has
found that it is no longer necessary that an issuers float be at least $75 million before there
is sufficient information about the issuer for its shares available to the public to create a
broad and efficient market.
EMPIRICAL EVIDENCE OF SKYPEOPLE MARKET EFFICIENCY
56. Of the five Cammer factors, the empirical factor was cited by the Cammer Court as one of
the most convincing ways to demonstrate efficiency:
As previously noted, one of the most convincing ways to demonstrate
efficiency would be to illustrate over time, a cause and effect relationship
between company disclosures and resulting movements in stock price.
17
Eligibility of Smaller Companies to Use Form S-3 or F-3 for Primary Securities Offerings, by the U.S.
Securities and Exchange Commission, J anuary 28, 2008.
18
Revisions to the Eligibility Requirements for Primary Securities Offerings on Forms S-3 and F-3, available at
http://www.sec.gov/rules/final/2007/33-8878.pdf, at pp. 7-9.
13
57. The special importance the Cammer Court placed on the empirical factor is justified by
economic principles, as the empirical factor focuses on the essence of market efficiency
whereas the other four factors are indicators that generally signal market efficiency.
58. I conducted two types of empirical tests of the efficiency of the market for SkyPeople
common stock to determine whether SkyPeoples stock price reacted to earnings
announcements. The first type comprised the F-test, and the second type comprised the
Ansari-Bradley volatility test. Both tests examined whether or not SkyPeople common
stock exhibited market efficiency by responding to the increased flow of information that
transpired on earnings announcement dates.
59. It is a widely accepted principle of finance that earnings announcements contain material
information.
19
Consequently, testing to determine whether or not SkyPeople common
stock reacted to earnings announcements by moving more on earnings announcement dates
than on other dates indicates whether the market for SkyPeople common stock was
efficient.
60. The F-test and Ansari-Bradley test measure whether SkyPeople stock price movements
were significantly greater on earnings announcement dates than on other dates, which
determines whether SkyPeople common stock efficiently reacted to the greater flow of
information that transpired on those dates.
61. I also conducted an event study to further assess efficiency of the market for SkyPeople
common stock. An event study investigates whether or not a security price reacts
appropriately to the release of new information. A significant and appropriate reaction to
new material information indicates market efficiency. Whereas the F-test and Ansari
Bradley volatility test determine whether SkyPeople stock responded efficiently to earnings
announcements collectively, the event study focused on the reaction of the stock to
individual events. By focusing the event study on alleged corrective disclosures, I can
ascertain whether the market for SkyPeople common stock was efficient with respect to the
particular information at issue in this case.
19
For example: Financial Reporting an Accounting Revolution, 3
rd
ed., William H. Beaver, 1998; and Earnings
Management to Exceed Thresholds, by Francois Degeorge, J ayendu Patel, and Richard Zeckhauser, Journal of
Business, 1999.
14
F-Test and Ansari-Bradley Volatility Test Conducted on Earnings Announcements
62. While reasonable people may disagree about whether certain earnings announcements are
appropriate for inclusion in a market efficiency event study, it is well established that
earnings announcements generally contain some of the most important and material
information that a company releases:
No other figure in the financial statements receives more attention by the
investment community than earnings per share. The relationship between
accounting earnings and security prices is probably the single most
important relationship in security analysis, and its prominence is reflected
in the attention given to price-earnings ratios.
Financial Reporting an Accounting Revolution, 3rd ed., William H. Beaver, 1998, p.
38.
Analysts, investors, senior executives, and boards of directors consider
earnings the single most important item in the financial reports issued by
publicly held firms.
Earnings Management to Exceed Thresholds, Francois Degeorge, Jayendu Patel,
and Richard Zeckhauser, Journal of Business, 1999, p. 1.
63. This sentiment is echoed in recent research on the impact of earnings announcements:
It is widely perceived that earnings announcements have a major impact
on stock prices at the level of individual stocks.
How Information Transmits to Equity Markets: Earnings Announcements and
Volatility, Jeffrey R. Gerlach and Jae H. Lee, Working Paper, Sungkyunkwan
University, 2010, p. 11.
64. Numerous well-known and highly-regarded academic studies (for example, Beaver [1968],
Ball and Brown [1968], Ball [1978], Watts [1978], Patell and Wolfson [1984], and Ball and
Kothari [1991]) have specifically examined stock price movements caused by earnings
announcements.
65. In short, it is indisputable that earnings announcements are important to investors and
therefore to the determination of stock prices. Thus, such announcements typically contain
material information that could cause the stock price to change.
66. By examining whether the Companys common stock price moved more on earnings
announcement days than on other days, one can determine whether the stock reacted to new
material information. This cause-and-effect relationship is the essence of market
15
efficiency. Consequently, greater stock price movement on earnings announcement days is
indicative of market efficiency.
Earnings Announcement Dates
67. During the Class Period, SkyPeople made six earnings announcements:
i. March 31, 2010, after the close of trading SkyPeople reported financial results
for Q4 2009 and fiscal 2009 (quarter and fiscal year ending December 31,
2009).
20
ii. May 17, 2010, after the close of trading SkyPeople reported financial results for
Q1 2010 (quarter ending March 31, 2010).
21
iii. August 16, 2010, before the start of trading SkyPeople reported financial results
for Q2 2010 (quarter ending J une 30, 2010).
22
iv. November 15, 2010, after the close of trading SkyPeople reported financial
results for Q3 2010 (quarter ending September 30, 2010).
23
v. March 31, 2011, after the close of trading SkyPeople reported financial results
for Q4 2010 and fiscal 2010 (quarter and fiscal year ending December 31,
2010).
24
vi. May 16, 2011, after the close of trading SkyPeople reported financial results for
Q1 2011 (quarter ending March 31, 2011).
25
68. Because the earnings announcements on March 31, 2010, May 17, 2010, November 15,
2010, March 31, 2011, and May 16, 2011, were each after the close of trading, for each of
these five events the trading day on which the new information would have impacted the
SkyPeople stock price would have been the following day. Consequently, for testing
purposes, the event dates are April 1, 2010; May 18, 2010; August 16, 2010; November 16,
2010; April 1, 2011; and May 17 2011.
69. There may have been additional material information aside from earnings information
disseminated on these event dates to which the stock price reacted. For example,
20
SkyPeople Fruit J uice Reports Record Results for the Fourth Quarter and Full Year 2009, PR Newswire, March
31, 2010.
21
SkyPeople Fruit J uice Reports Record Financial Results for the First Quarter 2010, PR Newswire, May 17,
2010.
22
SkyPeople Fruit J uice Reports $13.4 Million in Revenues and $0.22 in EPS for the Second Quarter 2010, PR
Newswire, August 16, 2010.
23
SkyPeople Fruit J uice Reports Record Revenues in Third Quarter 2010, PR Newswire, November 15, 2010.
24
SkyPeople Fruit J uice Reports Record 2010 Financial Results; $93.2 Million in Revenues, Net Income of $21.2
Million and EPS of $0.92; Capacity expansion projects to drive incremental growth in 2011, PR Newswire, March
31, 2011.
25
SkyPeople Fruit J uice Reports First Quarter 2011 Financial Results, PR Newswire, May16, 2011.
16
SkyPeople routinely announced forward guidance on earnings announcement dates. Stock
price reactions to such additional information would be further confirmation of market
efficiency, as that information would be illuminative of the projected future financial
condition of the Company.
70. Announcements of financial results and guidance sometimes constitute unexpected good
news and sometimes constitute unexpected bad news. If a stock price rises in value
following unexpected good news and falls following unexpected bad news that is, reacts
quickly to new material information then the dispersion of returns in a sample of such
days would differ significantly from the dispersion of returns in the sample of all other
days.
71. Dispersion is measured by the statistical standard deviation of the distribution of returns.
Standard deviation shows how much variation (or dispersion) exists in sample data points
from the average (mean). A low standard deviation indicates that sample data points tend
to be very close to the mean, while a high standard deviation indicates that sample data
points are spread out over a wide range of values around the mean.
72. I conducted two tests to determine whether the standard deviation of SkyPeople returns on
earnings announcement days was significantly different from the standard deviation of
SkyPeople returns on all other days in the Class Period: an F-test and an Ansari-Bradley
test, both described below. I ran both tests on the residual returns for SkyPeoples
common stock, that is the computed portion of the stock returns remaining after controlling
for the impact of market and peer group effects. The computation of residual returns is
described below in the Event Study section of this report. Running the tests on residual
returns focuses the tests more precisely on the effects of Company-specific information on
the Company stock price.
F-Test
73. If the F-test finds that the volatility of earnings days returns is significantly greater than
the volatility of returns for all other days, then the price of SkyPeople common stock
moved more on earnings days than on other days. Earnings days are, by definition, days in
which new material information was released. If SkyPeoples stock price moved more on
news days than on days in which no news was released, then there was a cause-and-effect
17
relationship between the release of new information and reactions in the price of SkyPeople
common stock, which establishes that SkyPeople common stock traded in an efficient
market.
74. The sample standard deviation of the earnings announcement day residual returns was
7.19%. The sample standard deviation of all other days residual returns was 3.55%.
Clearly, the earnings announcement days sample standard deviation was greater than the
sample standard deviation for all other days over two times greater. This means that,
compared with all other days residual returns, the earnings announcement day residual
returns are much more dispersed (spread out over a wide range of values relative to the
mean), indicating that SkyPeople common stock price consistently reacted to new, material
information contained within earnings announcements during the Class Period.
75. An F-test assesses whether the difference between the two sample standard deviations is
statistically significant, or alternatively, a potentially random result. The F-statistic for
these two samples is 4.09, which is greater than the 95% confidence level critical F-statistic
value of 2.25 (for a one-tail F-test with 5 and 289 degrees of freedom), indicating that the
difference in sample standard deviations is statistically significant, to a high degree of
certainty. The probability of obtaining this result is less than one in five hundred.
76. The F-test finds that the volatility of earnings days returns is significantly greater than the
volatility of returns for all other days. This result demonstrates that the price of SkyPeople
common stock moved more on earnings days than on other days. This statistical result
confirms that there was a cause-and-effect relationship between the release of new
information and reactions in the SkyPeople common stock price, which therefore
establishes that SkyPeople common stock traded in an efficient market during the Class
Period.
Ansari-Bradley Test
77. The Ansari-Bradley test is another test that determines whether two data samples have the
same or significantly different dispersions (i.e. standard deviation in the distribution of
returns). The Ansari-Bradley test is a well regarded and generally accepted test for this
18
purpose and is presented and described in numerous authoritative textbooks.
26
Unlike the
F-test, which is commonly used to test for differences in standard deviations, the Ansari-
Bradley test makes no assumption about the normality of the return distributions.
27
78. Applied to the earnings announcement returns and the sample of all other returns observed
during the Class Period, the Ansari-Bradley test, like the F-test, finds with an extremely
high degree of statistical certainty that the volatility of earnings announcement day returns
was significantly greater than the volatility of returns on all other days. The Ansari-
Bradley C-statistic for the two samples of SkyPeople stock residual returns is
-3.25, the absolute value of which is greater than the critical C-statistic threshold of 1.96
for significance at the 95% confidence level. The likelihood that this result was on account
of random chance is virtually nil. This result is further proof that the price of SkyPeople
common stock moved more on earnings announcement days than on other days during the
Class Period.
79. This statistical test result indicates that there was a cause-and-effect relationship between
the release of new information and reactions in the SkyPeople common stock price, which
therefore establishes that SkyPeople common stock traded in an efficient market during the
Class Period.
Event Study
80. The event study is the paramount tool for testing market efficiency, as Eugene Fama
attests:
The cleanest evidence on market-efficiency comes from event studies,
especially event studies on daily returns. When an information event can
be dated precisely and the event has a large effect on prices, the way one
abstracts from expected returns to measure abnormal daily returns is a
26
For example: Practical Nonparametric Statistics, 2
nd
edition, by J .W. Conover, J ohn Wiley & Sons, 1980;
Applied Nonparametric Statistics, by Wayne W. Daniel, Houghton Mifflin, 1978; Nonparametric Statistical
Methods, by Wolfe Hollander, J ohn Wiley & Sons, 1973; Beyond ANOVA: Basics of Applied Statistics, by Rupert,
G. Miller, J r., J ohn Wiley & Sons, 1986; and Biostatistical Analysis, 3
rd
edition, by J errold H. Zar, Prentice-Hall,
1996.
27
In this particular case, however, the F-test gives the same result as the Ansari-Bradley test, which is that the event
day return distribution has significantly greater volatility than does the return distribution for all other days
indicating market efficiency.
19
second-order consideration. As a result, event studies give a clear picture
of the speed of adjustment of prices to information.
Efficient Capital Markets: II, by Eugene F. Fama, Journal of Finance, 1991, p.
1607.
81. Event study analysis is one of the most commonly used analytic methodologies employed
by finance researchers. Campbell, Lo, and MacKinlay [1997] present an excellent
description and examples of the methodology and write about how it is generally accepted
and widely used in academic research.
28
Tabak and Dunbar [2001] write about how the
methodology is generally accepted and widely used in forensic applications.
29
82. An event study measures how much a stock price rises or falls in response to new
information on specific days when unexpected news is released. It first determines how
much of a stock price change cannot be explained by market and peer group factors. The
portion of a stock price change that cannot be attributable to market and peer group factors
is called the residual stock price movement or residual return. The event study isolates
the residual return and also tests whether the residual return can reasonably be explained as
merely a random fluctuation.
83. If the stock return over an event period is statistically significant, it indicates that the stock
price movement cannot be attributed to market and peer group factors, or to random
volatility, but rather was likely caused by company-specific information. Such proof of a
cause-and-effect relationship between new material information and the reaction in the
stock price establishes market efficiency.
84. It is important to note that an event study tests the joint hypothesis that the security trades
in an efficient market and that the valuation impact of the information disseminated on
each specific event date is of such magnitude as to exceed the threshold for statistical
significance.
28
Chapter 4 of The Econometrics of Financial Markets, by John Y. Campbell, Andrew W. Lo, and A. Craig
MacKinlay, Princeton University Press, 1997.
29
Materiality and Magnitude: Event Studies in the Courtroom, by David Tabak and Frederick Dunbar, in
Litigation Services Handbook, 3
rd
edition, J ohn Wiley & Sons, New York, 2001.
20
Selection of Events
85. For an event to be appropriate for inclusion in the event study, the information released
should be new, unexpected, and sufficiently important to reasonably expect that it could
cause a large movement in the price of SkyPeople common stock.
86. By focusing the event study on disclosures of information related to the alleged fraud, I can
ascertain whether the market for SkyPeople stock was efficient with respect to the
particular information at issue in this case. That is, if the event study proves that SkyPeople
common stock declined in a statistically significant fashion on the allegedly corrective
disclosure days, I can determine that the market for SkyPeople common stock was
specifically efficient in relation to the alleged fraud. Consequently, the empirical behavior
of SkyPeople common stock following these disclosures is important for determining
whether the market for SkyPeople common stock was efficient for purposes of the fraud-
on-the-market principle.
87. A comprehensive identification of all disclosures of information related to the alleged fraud
is beyond the scope of this report, and is properly addressed in an analysis of loss causation
and damages. However, the Complaint and a review of Class Period events identify certain
dates on which Company-specific information was disseminated that appears to be partially
corrective of the alleged misrepresentations and omissions.
88. The following is a list of the event dates selected using the described criteria, along with a
brief summary of the disclosures that were made:
i. April 1, 2011 That day, the Company issued its 10-K for the Fiscal Year ended
December 31, 2010. In the filing, SkyPeople disclosed that the acquisition of
Yingkou on November 25, 2009, was a related party transaction that the Company
had failed to classify, as required by law, in its prior SEC filings.
30
Further,
SkyPeople disclosed that management had determined this failure of oversight
constituted a material weakness in the Companys disclosure controls and
procedures.
31
ii. J une 1, 2011 That day, Absaroka Capital Management published a research report
questioning, among other aspects of the Companys business, discrepancies
30
SkyPeople Fruit J uice form 10-K for the Fiscal Year ended December 31, 2010, filed April 1, 2011, p. 47.
31
SkyPeople Fruit J uice form 10-K for the Fiscal Year ended December 31, 2010, filed April 1, 2011, p. 47.
21
between SAIC filings filed by SkyPeople with the government of China, and SEC
filings filed by SkyPeople with the government of the United States.
32
Isolating the Impact of Company-Specific Information
89. Event study analysis determines how much of the Companys stock return following each
of the events was driven by Company-specific information as opposed to the market and
peer group factors.
90. The method, which is generally accepted and widely used in econometric modeling,
involves running a regression to determine how SkyPeople common stock typically
behaved in relation to the overall stock market and its peer group, and then using the
regression model to determine how much of each event days actual return is explained by
the market and peer group factors (the explained return).
91. The explained return is then subtracted from the actual return, to isolate the residual return,
which is the stocks return after controlling for market and peer group effects.
92. I ran a regression modeling the return of SkyPeople common stock as a function of: 1) a
constant term, 2) the returns of the overall stock market, and 3) a peer group index return.
93. For the overall stock market factor I used the CRSP Market Total Return Index (Market
Index), which is a generally accepted and widely used measure of the overall stock market
performance. The CRSP Market Total Return Index appropriately incorporates payment of
dividends by the constituent companies.
94. For the peer group factor I used the Chicago Board Options Exchange (CBOE) China
Index (China Index), which captures the returns of Chinese companies with stock listed
on U.S. exchanges.
33
95. The index levels and returns of the Market Index and the Peer Index are presented in
Exhibit-5.
96. I ran the regression on daily returns covering the entire Class Period, using dummy
variables to control for potentially abnormal returns on the event dates being tested in the
event study as well as on earnings announcement dates during the Class Period. Using
dummy variables to control for extraordinary events in the estimation period, so that the
32
Pulp Fiction, by Kevin Barnes, Absaroka Capital Management, analyst report, June 1, 2011.
33
Futures on the CBOE China Index (CX) Managing Exposure in the Emerging Market, CBOE China Index
description, http://cfe.cboe.com/GENERAL/CXQRG.pdf, accessed August 18, 2012.
22
model parameters properly reflect typical stock price movements, is a widely used and
generally accepted methodology.
34
97. All returns used in the event study are logarithmic returns that is, the natural logarithm of
the ratio of the current days closing price plus dividends to the previous days closing
price.
35
Logarithmic returns are commonly used in event studies and equity analysis.
Analysts and researchers generally use logarithmic returns instead of percent price changes
because of various computational advantages.
Regression Results
98. The regression results, presented in Exhibit-6, show that SkyPeople common stock returns
were significantly related to the returns of the Peer Index, but not the Market Index, when
included in the same regression model. Apparently, the regression model for SkyPeoples
stock return picks up the market effect through the peer group effect, which is correlated
with the overall market. As expected in situations where there is a large degree of cross-
correlation, the Market Index appears to not be significantly related to the Companys stock
returns when included with the Peer Index in the same regression. This is not an
uncommon pattern in econometric modeling of stock returns.
99. Nonetheless, the regression analysis removes the market and industry effects, isolating the
impact of Company-specific information on SkyPeoples common stock.
100. I computed the explained portion of the SkyPeople common stock returns by adding: 1)
the estimated regression intercept term of -0.276%, 2) the respective days Market Index
return multiplied by the regressions Market Index coefficient of 0.175, and 3) the Peer
Index return multiplied by the regressions Peer Index coefficient of 0.488. The residual
return is the actual return minus the explained return, and, which represents the portion of
34
See, for example: Event Studies with a Contaminated Estimation Period, by Nihat Aktas, Eric de Bodt, and
J ean-Gabriel Cousin, Journal of Corporate Finance, 2007; Measuring the Effects of Regulation with Stock Price
Data, by John J . Binder, The RAND Journal of Economics, 1985; Intervention Analysis with Applications to
Economic and Environmental Problems, by G. E. P. Box and G. C. Tiao, Journal of the American Statistical
Association, 1975; Testing for Market Efficiency: A Comparison of the Cumulative Average Residual
Methodology and Intervention Analysis, by David F. Larcker, Lawrence A. Gordon and George E. Pinches,
Journal of Financial & Quantitative Analysis, 1980; Measuring Abnormal Performance: The Event Parameter
Approach Using Joint Generalized Least Squares, by Paul H. Malatesta, The Journal of Financial and Quantitative
Analysis, 1986; Conditioning the Return-Generating Process on Firm-Specific Events: A Discussion of Event
Study Methods, by Rex Thompson, The Journal of Financial and Quantitative Analysis, 1985.
35
Appendix-1 presents the mathematical formula for the logarithmic return and a discussion of the measure.
23
SkyPeople common stocks return that remains after removing the effects of the Market
Index and Peer Index.
t-test
101. For each event, a statistical test called at-test was conducted to determine whether the
residual return can be explained by random volatility, or alternatively must have been
caused by Company-specific information. A t-test compares the residual return following
an event date to the typical residual returns exhibited in the estimation period. If the event
residual return is far greater (positively or negatively) than the typical residual return, thet-
test indicates that the residual return in question cannot have been caused by random
volatility alone i.e., it is statistically significant.
36
102. The event study results are presented below and summarized in Exhibit-7.
Event Study Results
April 1, 2011
103. On Friday, April 1, 2011, SkyPeople reported financial results for the fourth quarter of FY
2010. That same day, the Company also filed a 10-K with the SEC detailing those financial
results and its financial position as of December 31, 2010.
104. In its 10-K filing, SkyPeople disclosed that it had determined the acquisition of Yingkou
was a related party transaction. The nature of this transaction had not been acknowledged
on prior financial statements. According to the SkyPeople, the failure to disclose this issue
constituted a material weakness.
36
The test is called thet-test because it involves the computation of at-statistic. For a 1-day event window, the t-
statistic is the one-day residual return divided by the standard error of the regression residual returns. If the absolute
value of the t-statistic is greater than the critical t-statistic value (1.96 for large samples), the likelihood that the
residual return could have been caused by random volatility alone is less than 5%, which is generally accepted to be
so unlikely that the random volatility explanation can be rejected.
24
In connection with [the periodic evaluation of disclosures], management
determined that the acquisition of Yingkou that was consummated in
November 25, 2009 was a related party transaction that should have been
subject to our policies and procedures governing related party transactions
(Statement of Policies and Procedures with Respect to Related Party
Transactions).
management determined that the failure to disclose the relevant affiliation

while the transaction was pending was a material weakness in our
disclosure controls and procedures.
SkyPeople Fruit Juice Form 10-K for the Fiscal Year Ended 31 December 2010, p.
47.
105. Analyst coverage published that day noted the risk that such a revelation presented, and
downgraded the assessment of SkyPeople common stock value as a result.
Additionally, major deficiency identified in internal control and corporate
governance warrants further scrutinization, in our view.
Material weakness in internal control. The company disclosed in its 10-

K filed today that it has failed to disclose the Yingkou acquisition
(11/25/2009) as a related party transaction to the Board and in its previous
SEC filings as required.
Valuation discount reflects a dampened growth outlook and internal

control concerns.
SPU: Downgrading to NEUTRAL on Concerns over Slower Growth & Control
Issues, by Howzard Zhou and Nick Ning, Roth Capital Partners, analyst report,
April 1, 2011 (emphasis in original).
106. On April 1, 2011, SkyPeople common stock fell 13.58% (on a logarithmic returns basis).
That day, the Market Index return was 0.54% and the Peer Index return was 1.54%.
According to the regression results, the explained return for SkyPeople common stock was
0.57% on April 1, 2011, and the residual return was -14.15%.
107. A residual return of -14.15% is an unusually large one-day return for SkyPeople common
stock. That residual return is associated with a t-statistic of -4.17, which indicates
statistical significance at the 0.004% significance level. That is, the likelihood of obtaining
a residual return of this magnitude and associated t-statistic is less than one in ten thousand.
Therefore, the common stock return is deemed statistically significant.
108. The magnitude of the residual return on April 1, 2011 and its statistical significance
indicate that to a high degree of statistical certainty, the price of SkyPeople common stock
25
decreased in response to the earnings announcement announced the previous day and the
material weakness disclosure released that day, precisely the information at issue in this
case.
J une 1, 2011
109. On Wednesday, J une 1, 2011, Absaroka Capital Management published a research report
accusing SkyPeople of misrepresenting the size of its business in its SEC filings. Absaroka
also alleged that SkyPeople had engaged in a myriad of questionable behaviors.
In this initiating Coverage Report, Absaroka will present compelling
evidence that SkyPeople has materially misrepresented its production
volume, revenue, capital equipment, and profitability.
1. SkyPeoples Chinese SAIC financials indicate the Company is less

than 10% the size claimed in the United States SEC financials
2. Visits to all four of SkyPeoples production factories found idle
facilities with limited and antiquated production equipment; the
facilities only operate in production mode for less than two months per
year due to limited demand and inefficient production
3. SkyPeople does not own the largest kiwifruit plantation in Asia and is
forced to source inputs for its factories from local farmers at high costs
due to its relatively small size
4. Retail channel checks and discussions with SkyPeoples distributors
and customers make the companys claims regarding product
distribution and sales volume unbelievable. Many of the Companys
customers claim to have done little or no business with the Company
and Absarokas researches struggled to find the Companys beverage
products on store shelves
5. EBITDA margins, inventory turnover, accounts receivables, and
selling/marketing costs seem particularly dubious relative to peers and
indicate potential accounting shenanigans
6. A history of low-quality auditors raises significant concerns about
validity of published financials and future business prospects
Pulp Fiction, by Kevin Barnes, Absaroka Capital Management, 1 June 2011.
110. On J une 1, 2011, the SkyPeople common stock return was -20.37% (on a logarithmic
returns basis). That day, the Market Index fell 2.37% and the Peer Index return fell 1.82%.
According to the regression results, the explained return for SkyPeople common stock was
-1.58% on J une 1, 2011, and the residual return was -18.80%.
26
111. A residual return of -18.80% is an unusually large one-day return for SkyPeople common
stock. That residual return is associated with a t-statistic of -5.53, which indicates that the
residual return was too severe to have been a random fluctuation. The probability that a
residual return of this magnitude and associated t-statistic could be caused by random
volatility alone is less than one in ten million. Therefore, the common stock return is
deemed statistically significant.
112. The magnitude of the residual return on J une 1, 2011 and its statistical significance indicate
that to a high degree of statistical certainty, the price of SkyPeople common stock
decreased in response to the Absaroka Capital Management report and allegations of fraud
issued that day, the information at the heart of this case.
Event Study Summary
113. The event study results show that during the Class Period, SkyPeople common stock
reacted appropriately in response to the release of new information. On both event dates
tested, SkyPeople common stock exhibited statistically significant returns in response to
information related to the alleged misdeeds at the heart of the case. This relationship
between the release of information and movements in the stock price demonstrates that the
market for SkyPeople common stock was efficient during the Class Period.
Empirical Analysis Summary
114. The F-test, Ansari-Bradley test, and event study results show that SkyPeople common
stock reacted appropriately and consistently in response to new, material information being
released throughout the Class Period. These results demonstrate that the market for
SkyPeople common stock was efficient throughout the Class Period.
SUMMARY
115. SkyPeople common stock traded on the NASDAQ and numerous market makers facilitated
trading in SkyPeople common stock. The Company was covered by analysts. Institutional
ownership of SkyPeople common stock was widespread. Trading was active.
116. Not only did the market for SkyPeople common stock satisfy the Cammer factors that
indicate market efficiency, but it also satisfied the empirical Cammer factor, which
27
demonstrates the essence of market efficiency. The event study and F-test proved that
there was a consistent cause and effect relationship between the release of information and
movements in the SkyPeople common stock price.
117. Thus, I conclude that SkyPeople common stock traded in an efficient market over the
course of the Class Period.
LIMITING FACTORS
118. This report is furnished solely for the purpose of court proceedings in the above named
matter and may not be used or referred to for any other purpose. The analysis and opinions
contained in this report are based on information available as of the date of this report. I
reserve the right to supplement or amend this report, including in the event additional
information becomes available.
Gang Hu, Ph.D., CFA
28
APPENDIX-1: LOGARITHMIC RETURNS
Logarithmic returns, rather than percent change returns are commonly used in stock return
regressions and event study analysis and were used in the regression modeling here. The formula
for a logarithmic return is:
|
|
.
|
\
| +
=
1
ln
t
t t
t
P
d P
R
where:
R
t
is the logarithmic return on day t;
P
t
is the stock price at the end of day t;
P
t-1
is the stock price from the previous day, day t-1;
d
t
is the dividend on day t, if any.
The formula for converting a logarithmic return into a dollar return is:
) 1 (
1
=

t
R
t t
e P DR
where:
DR
t
is the dollar return on day t;
P
t-1
is the stock price from the previous day, day t-1;
e is natural e (approximately 2.7);
R
t
is the logarithmic return on day t.
If a stock falls from $20 to $18, the percent change in price is -10%, equal to the $2 decline
divided by the original $20 price. The logarithmic return, however, is -10.54%, equal to
ln($18/$20).
The logarithmic return relates a price change to an average of the original, final, and intervening
prices over the course of a price decline. As such, for large price declines, it is possible for a
logarithmic price decline to exceed 100%, since the price decline may be greater than the
average of the beginning and ending prices.
An attractive feature of a logarithmic return is that it can be decomposed linearly into
contributing factors. That is, the portion of a logarithmic return caused by company-specific
information is isolated by subtracting from the total logarithmic return the portion of the total
return caused by market and peer group factors.
29
Exhibit-1
Documents Received, Reviewed, and Relied Upon
LEGAL DOCUMENTS
- Consolidated Amended Class Action Complaint, filed November 28, 2011.
NEWS ARTICLES
- Factiva news articles (435) from 31 March 2009 to 30 May 2012 downloaded using the
following search parameters: Company: SkyPeople Fruit J uice, Inc.; Sources Field: all
sources.
- SkyPeople Fruit J uice Reports Record Results for the Fourth Quarter and Full Year
2009, PR Newswire, March 31, 2010.
- SkyPeople Fruit J uice Reports Record Financial Results for the First Quarter 2010, PR
Newswire, May 17, 2010.
- SkyPeople Fruit J uice Reports $13.4 Million in Revenues and $0.22 in EPS for the
Second Quarter 2010, PR Newswire, August 16, 2010.
- SkyPeople Fruit J uice Reports Record Revenues in Third Quarter 2010, PR Newswire,
November 15, 2010.
- SkyPeople Fruit J uice Reports Record 2010 Financial Results; $93.2 Million in
Revenues, Net Income of $21.2 Million and EPS of $0.92; Capacity expansion projects to
drive incremental growth in 2011, PR Newswire, March 31, 2011.
- SkyPeople Fruit J uice Reports First Quarter 2011 Financial Results, PR Newswire,
May 16, 2011.
ANALYST REPORTS
- Roth Capital Partners, April 1, 2010.
- Roth Capital Partners, May 14, 2010.
- Roth Capital Partners, August 17, 2010.
- Roth Capital Partners, November 12, 2010.
- Roth Capital Partners, March 30, 2011.
- Roth Capital Partners, April 1, 2011.
30
Exhibit-1
- Absaroka Capital Management, J une 1, 2011.
SEC FILINGS
- SkyPeople Fruit J uice, Inc. Form 10-K for the Fiscal Year Ended December 31, 2009.
- SkyPeople Fruit J uice, Inc. Form S-1A, filed J anuary 20, 2010.
- SkyPeople Fruit J uice, Inc. Form 25, filed April 19, 2010.
- SkyPeople Fruit J uice, Inc. Form 8-A12B, filed April 19, 2010.
- SkyPeople Fruit J uice, Inc. Form S-1, filed April 20, 2010.
- SkyPeople Fruit J uice, Inc. Form S-1A, filed April 30, 2010.
- SkyPeople Fruit J uice, Inc. Form 10-Q, filed May 17, 2010.
- SkyPeople Fruit J uice, Inc. Form S-1A, filed May 24, 2010.
- SkyPeople Fruit J uice, Inc. Form S-1A, filed J une 4, 2010.
- SkyPeople Fruit J uice, Inc. Form DEF 14A, filed J une 8, 2010.
- SkyPeople Fruit J uice, Inc. Form S-1A, filed J une 23, 2010.
- SkyPeople Fruit J uice, Inc. Form AW, filed J une 23, 2010.
- SkyPeople Fruit J uice, Inc. Form POS AM, filed J une 25, 2010.
- SkyPeople Fruit J uice, Inc. Form AW, filed J uly 8, 2010.
- SkyPeople Fruit J uice, Inc. Form AW WD, filed J uly 8, 2010.
- SkyPeople Fruit J uice, Inc. Form 10-Q, filed August 16, 2010.
- SkyPeople Fruit J uice, Inc. Form S-1A, filed August 16, 2010.
- SkyPeople Fruit J uice, Inc. Form 424B1, filed August 26, 2010.
- SkyPeople Fruit J uice, Inc. Form 10-Q, filed November 15, 2010.
- SkyPeople Fruit J uice, Inc. Form 10-K for the Fiscal Year Ended December 31, 2010.
- SkyPeople Fruit J uice, Inc. Form 10-KA for the Fiscal Year Ended December 31, 2010.
- SkyPeople Fruit J uice, Inc. Form 12b-25, filed April 1, 2011.
- SkyPeople Fruit J uice, Inc. Form 10-Q, filed May 16, 2011.
- SkyPeople Fruit J uice, Inc. Form DEF 14A, filed J uly 25, 2011.
- SkyPeople Fruit J uice, Inc. Form 10-Q, filed August 15, 2011.
- SkyPeople Fruit J uice, Inc. Form 10-QA, filed August 22, 2011.
- SkyPeople Fruit J uice, Inc. Form 10-Q, filed November 14, 2011.
ACADEMIC AND PROFESSIONAL LITERATURE
- Aktas, Nihat, Eric de Bodt, and J ean-Gabriel Cousin, Event Studies with a
Contaminated Estimation Period, Journal of Corporate Finance, 2007.
- Ball, Ray, and Stephen J . Brown, An Empirical Evaluation of Accounting Income
Numbers, Journal of Accounting Research, 1968.
31
Exhibit-1
- Ball, Ray, Anomalies in Relationships Between Securities Yield and Yield-Surrogates,
Journal of Financial Economics, 1978.
- Ball, Ray, and S. P. Kothari, Security Returns around Earnings Announcements, The
Accounting Review, 1991.
- Barber, Brad M., Paul A. Griffin, and Baruch Lev, The Fraud-on-the-Market Theory and
the Indicators of Common Stock Efficiency, Journal of Corporation Law, 1994.
- Beaver, William H., The Information Content of Annual Earnings Announcements
Journal of Accounting and Research, 1968.
- Beaver, William H., Financial Reporting an Accounting Revolution, 3
rd
edition, 1998.
- Binder, J ohn J ., Measuring the Effects of Regulation with Stock Price Data, The RAND
Journal of Economics, 1985.
- Box, G.E.P., and G.C. Tiao, Intervention Analysis with Applications to Economic and
Environmental Problems, Journal of the American Statistical Association, 1975.
- Campbell, J ohn Y., Andrew W. Lo and A. Craig MacKinaly, The Econometrics of
Financial Markets, Princeton University Press, 1997.
- Degeorge, Francois, J ayendu Patel, and Richard Zeckhauser, Earnings Management to
Exceed Thresholds, Journal of Business, 1999.
- Chen, Hailiang, Prabuddha De, Yu Hu, and Byoung-Hyoun Hwang, Customers As
Advisors: The Role of Social Media in Financial Markets, Working Paper, 2012.
- Conover, W. J ., Practical Nonparametric Statistics, 2nd edition, J ohn Wiley & Sons,
1980.
- Daniel, Wayne W., Applied Nonparametric Statistics, Houghton Mifflin, 1978.
- Fama, Eugene F., Efficient Capital Markets: II, Journal of Finance, 1991.
- Gerlach, J effrey R., and J ae H. Lee, How Information Transmits to Equity Markets:
Earnings Announcements and Volatility, Working Paper, Sungkyunkwan University,
2010.
- Hollander, Wolfe, Nonparametric Statistical Methods, J ohn Wiley & Sons, 1973.
- Larcker, David F., Lawrence A. Gordon, and George E. Pinches, Testing for Market
Efficiency: A Comparison of the Cumulative Average Residual Methodology and
Intervention Analysis, The Journal of Financial and Quantitative Analysis, 1980.
- Malatesta, Paul H., Measuring Abnormal Performance: The Event Parameter Approach
Using J oint Generalized Least Squares, The Journal of Financial and Quantitative
Analysis, 1986.
- Miller, Rupert G. J r., Beyond ANOVA, Basics of Applied Statistics, J ohn Wiley & Sons,
1986.
- Patell, J ames M., and Mark A. Wolfson, The intraday speed of adjustment of stock
prices to earnings and dividend announcements, Journal of Financial Economics, 1984.
- Tabak, David, and Frederick Dunbar, Materiality and Magnitude: Event Studies in the
Courtroom, Litigation Services Handbook, 3rd edition, J ohn Wiley & Sons, 2001.
32
Exhibit-1
- Thompson, Rex, Conditioning the Return-Generating Process on Firm-Specific Events:
A Discussion of Event Study Methods, The Journal of Financial and Quantitative
Analysis, 1985.
- Tumarkin, Robert, Internet Message Board Activity and Market Efficiency: A Case
Study of the Internet Service Sector using RagingBull.com, Financial Markets,
Institutions, & Instruments, volume 11, issue 4, November 2002.
- Watts, Ross L. Systematic Abnormal Returns After Quarterly Earnings
Announcements Journal of Financial Economics, 1978.
- Zar, J errold H., Biostatistical Analysis, 3rd edition, Prentice-Hall, 1996.
DATA
- Bloomberg.
- Capital IQ.
- Center for Research in Security Prices (CRSP).
- Factiva.
- Thomson Research.
- Vickers.
LEGAL CASES
- Basic, Inc. v. Levinson, 485 U.S. 224 (1988).
- Cammer v. Bloom, 711 F. Supp. 1264 (D.N.J ., 1989).
- Erica P. John Fund, Inc. v. Halliburton Co., 133 S. Ct. 2179 (2011).
- Amgen Inc., et al. v. Connecticut Retirement Plans, 133 S. Ct. 1184 (2013).
OTHER
- SeekingAlpha.com
- Eligibility of Smaller Companies to Use Form S-3 or F-3 for Primary Securities
Offerings, U.S. Securities and Exchange Commission, J anuary 28, 2008.
- Futures on the CBOE China Index (CX) Managing Exposure in the Emerging Market,
CBOE China Index description, http://cfe.cboe.com/GENERAL/CXQRG.pdf, accessed
August 18, 2012.
- Revisions to the Eligibility Requirements for Primary Securities Offerings on Forms S-3
and F-3, obtained from http://www.sec.gov/rules/final/2007/33-8878.pdf.
- SEC.gov
- Any other documents and data cited in the report.
33
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
J une 2013
Babson College
223Tomasso Hall
Wellesley, MA 02457
Phone: 781-239-4946
E-mail: ghu@babson.edu
Web: http://faculty.babson.edu/ghu/
EXPERIENCE
Babson College, Finance Division. Wellesley, MA.
Associate Professor (with tenure), 2011-present.
Zwerling Family Endowed Term Chair in Finance, 2013-present.
Assistant Professor, 2005-2011.
Fidelity Term Chair, 2005-2010.
Crowninshield Financial Research. Wellesley, MA.
Affiliated Expert, 2012-present.
Fidelity Management & Research Company, Global Equity Trading. Boston, MA.
Quantitative Trade Analyst, 2001-2003.
Intern, 2000.
EDUCATION
Ph.D. in Finance, Boston College, 2005.
Dissertation: Essays in Corporate Finance and Institutional Trading.
CFA (Chartered Financial Analyst), CFA Institute, 2003.
Doctoral Program in Operations and Decision Sciences, University of Pittsburgh, 1996-1998.
B.E. in System Engineering, Tianjin University, China, 1996.
AWARDS AND GRANTS
x Babson College Faculty Scholarship Award, 2010.
x Western Finance Association (WFA) NASDAQ Award for the Best Paper on Capital
Formation, Big Sky, MT, 2007.
x 1
st
Prize, Chicago Quantitative Alliance (CQA) Annual Academic Competition, 2007.
x Yale School of Management, Millstein Center for Corporate Governance & Performance,
Research Grant, 2007.
x INQUIRE Europe (Institute for Quantitative Investment Research) Research Grant, 2006.
x WFA NYSE PhD Student Travel Grant, Portland, OR, 2005.
x Best Paper Award, Derivatives/Microstructure, Eastern Finance Association (EFA)
Meeting, Norfolk, VA, 2005.
x Morgan Stanley Equity Microstructure Research Grant, 2004.
34
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
REFEREED JOURNAL PUBLICATIONS
1. The Year-End Trading Activities of Institutional Investors: Evidence from Daily Trades,
with R. David McLean, J effery Pontiff, and Qinghai Wang, Review of Financial Studies,
accepted conditional on minor revision.
- AFA 2010.
2. Institutional Investors and the Information Production Theory of Stock Splits, with
Thomas Chemmanur and J iekun Huang, Journal of Financial and Quantitative Analysis,
forthcoming.
- Featured in the Harvard Law School Forum on Corporate Governance and Financial
Regulation.
3. Underestimation of Securities Fraud Aggregate Damages Due to Inter-Fund Trades, with
Steven Feinstein, Mark Marcus, and Zann Ali, Journal of Forensic Economics,
forthcoming.
4. OLIVE: A Simple Method for Estimating Betas When Factors Are Measured with Error,
with J . Ginger Meng and J ushan Bai, Journal of Financial Research 34, 2011, 27-60.
5. The Role of Institutional Investors in Initial Public Offerings, with Thomas Chemmanur
and J iekun Huang, Review of Financial Studies 23, 2010, 4496-4540.
- WFA 2007 NASDAQ Award.
- Cited in SEC Chairmans response letter to an inquiry by Congress.
6. Costly Arbitrage and Idiosyncratic Risk: Evidence from Short Sellers, with Ying Duan
and R. David McLean, Journal of Financial Intermediation 19, 2010, 564-579.
- WFA 2006, 1
st
Prize Chicago Quantitative Alliance 2007 Academic Competition.
7. Is Dividend Smoothing Universal? New Insights from a Comparative Study of Dividend
Policies in Hong Kong and the U.S., with Thomas Chemmanur, J ie He, and Helen Liu,
Journal of Corporate Finance 16, 2010, 413-430.
8. The Role of Institutional Investors in Seasoned Equity Offerings, with Thomas
Chemmanur and Shan He, Journal of Financial Economics 94, 2009, 384-411.
- AFA 2006, NBER 2007.
9. Measures of Implicit Trading Costs and Buy-Sell Asymmetry, Journal of Financial
Markets 12, 2009, 418-437.
- WFA 2005 NYSE PhD Student Travel Grant, EFA 2005 Best Paper Award.
10. The Market for Shareholder Voting Rights Around Mergers and Acquisitions: Evidence
from Institutional Daily Trading and Voting, with Jennifer Bethel and Qinghai Wang,
Journal of Corporate Finance 15, 2009, 129-145.
35
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
11. When is Stock Picking Likely to be Successful? Evidence from Mutual Funds, with
Ying Duan and R. David McLean, Financial Analysts Journal 65, 2009, 55-66.
12. Opinion Divergence Among Professional Investment Managers, with J. Ginger Meng
and Mark Potter, Journal of Business Finance and Accounting 35, 2008, 679-703.
13. Screening Location Strategies to Reduce Exchange Rate Risk, with Timothy Lowe and
Richard Wendell, European Journal of Operational Research 136, 2002, 573-590.
14. Ranking by Eigenvector Versus Other Methods in the Analytic Hierarchy Process, with
Thomas Saaty, Applied Mathematics Letters 11, 1998, 121-125.
OTHER PUBLICATIONS
15. Emerging Issues in Evaluating Market Efficiency, with Mark Marcus, Law360,
Securities and Class Action Expert Analysis section, 2012.
16. Stock Repurchases and Splits (in Chinese), with J. Ginger Meng, in Volume of
Finance - Series on the Frontiers of Western Research in the Humanities and Social
Sciences, Huimin Li and Dongmin Ke (editors), China Renmin University Press, Beijing,
China, 2011, Chapter 18, 471-496.
17. Legal and Economic Issues in Litigation Arising from the 2007-2008 Credit Crisis, with
Jennifer Bethel and Allen Ferrell, in Prudent Lending Restored: Securitization after the
Mortgage Meltdown, Yasuyuki Fuchita, Richard Herring, and Robert Litan (editors),
Brookings Institution Press, Washington DC, 2009, Chapter 5, 163-235.
- Translated and published in Chinese (Comparative Studies 39, December 2008, 54-96,
China CITIC Press) and J apanese (Nomura Institute of Capital Markets Research).
- Featured in the Harvard Law School Forum on Corporate Governance and Financial
Regulation.
18. An Analysis of Liquidity Across Markets: Execution Costs on the NYSE versus
Electronic Markets, with Michael Goldstein and J. Ginger Meng, in Liquidity, Interest
Rates and Banking, Jeffrey Morrey and Alexander Guyton (editors), Nova Science
Publishers, New York, 2009, Chapter 7, 139-167.
19. VWAP Cost Excluding Own Trades, Journal of Trading 2, Winter 2007, 30-34.
20. Window Dressing by Institutional Investors, with Jaime Villa, Babson Insight, 2007.
36
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
21. A Comparative Analysis of Contributing Factors to Successful Entrepreneurship in
Japan, USA, and China: The Importance of Psychological Attributes (in Japanese), with
Toyoaki Nishida and Makoto Ohtsu, in Comparative Study of Entrepreneurship in J apan,
USA, and China, edited by Makoto Ohtsu and others, Soseisha, Tokyo, J apan, 2007,
Chapter 3, 53-91.
- Short English version appeared in J apanese Association of Administrative Science, 9
th
Annual Convention Conference Proceedings, 290-293, Nagoya University, 2006.
WORKING PAPERS
Do Institutional Investors Have Private Information about CEO Turnovers?, with Thomas
Chemmanur and Yingzhen Li.
Can Transient Institutions Correctly Interpret Small Negative Earnings Surprises in the
Absence of Access to Managements Private Information?, with Bin Ke and Yong Yu.
Decomposing IPO Initial Returns in Chinas ChiNext Market: The Stochastic Frontier
Approach, with J. Ginger Meng, Wei Zhang, and Gaofeng Zou.
Disentangling GAAP Difference and Accounting Falsification of Financial Statement
Discrepancies: A Study of Delisted Chinese Reverse Merger Companies in the U.S. with
Yimiao Chen, Ling Lin, and Min Xiao.
Does the January Anomaly Survive in Equity Exchange-Traded Funds? with Tony Ruan.
SELECTED WORK-IN-PROGRESS
Trading by Crossing, with Jennifer Conrad and Sunil Wahal.
CONFERENCES AND SEMINARS
x Do Institutional Investors Have Private Information about CEO Turnovers?
- European Finance Association (EFA) Meetings, Cambridge, UK, 2013.
- Financial Management Association (FMA) Meeting, Chicago, 2013.
- Southern Finance Association (SFA) Meeting, Puerto Rico, 2013.
x Do Fund Managers Try to Mislead Investors? Evidence from Year-End Trades
- American Finance Association (AFA) Annual Meeting, Atlanta, GA, 2010.
- European Finance Association (EFA) Meetings, Bergen, Norway, 2009.
- Financial Intermediation Research Society (FIRS) meetings, Prague, Czech, 2009.
- Swiss Society for Financial Market Research Conference, Geneva, Switzerland, 2009.
x Institutional Investors and the Information Production Theory of Stock Splits
- China International Conference in Finance (CICF), Chongqing, China, 2012.
- Boston Area Finance Symposium (BAFS), 2010.
- Mid-Atlantic Research Conference in Finance (MARC), Philadelphia, 2009.
37
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
- Financial Management Association (FMA) Meeting, Dallas, 2008.
- AsianFA-NFA International Conference, J apan, 2008.
- Seminars (2009-2012): Babson College, Bentley University, City University of Hong
Kong, Indiana University, National University of Singapore, Purdue University,
Shanghai Advanced Institute of Finance, University of Hong Kong, University of
Illinois at Urbana-Champaign, University of Massachusetts Amherst, University of
Notre Dame.
x Decomposing IPO Initial Returns in Chinas ChiNext Market: The Stochastic Frontier
Approach
- Midwest Finance Association Annual Meeting, Chicago, 2013.
x Can Transient Institutions Correctly Interpret Small Negative Earnings Surprises in the
Absence of Access to Managements Private Information?
- American Accounting Association (AAA) Financial Accounting and Reporting Section
(FARS) Mid-Year Meeting, Tampa, FL, 2011.
- American Accounting Association (AAA) Annual Meeting, San Francisco, CA, 2010.
x Does the January Anomaly Survive in Equity Exchange-Traded Funds?
- Financial Management Association (FMA) Meeting, Reno, NV, 2009.
- Financial Management Association (FMA) Asian Conference, Xiamen, China, 2009.
- Financial Management Association (FMA) European Conference, Turin, Italy, 2009.
x The Role of Institutional Investors in Initial Public Offerings
- Western Finance Association (WFA) Meeting (NASDAQ Award for the Best Paper on
Capital Formation), Big Sky, MT, 2007.
- Financial Management Association (FMA) Meeting, Top-Ten Percent Sessions, Salt
Lake City, UT, 2006.
- European Finance Association (EFA) Meeting, Zurich, Switzerland, 2006.
- Seminars (2004-2006): Babson College, Boston College, Fordham University,
University of Georgia, University of Memphis.
x Costly Arbitrage and Idiosyncratic Risk: Evidence from Short Sellers
- Chicago Quantitative Alliance (CQA) Fall Conference (1
st
Prize), Chicago, 2007.
- Western Finance Association (WFA) Meeting, Keystone, CO, 2006.
- Financial Management Association (FMA) Meeting, Salt Lake City, UT, 2006.
- Seminars (2006-2009): Babson College, Binghamton University-SUNY, OTA Asset
Management, State Street Global Advisors-Advanced Research Center.
x The Role of Institutional Investors in Seasoned Equity Offerings
- National Bureau of Economic Research (NBER) Market Microstructure Meeting,
Boston, MA, 2007.
- American Finance Association (AFA) Annual Meeting, Boston, MA, 2006.
- European Finance Association (EFA) Meeting, Ljubljana, Slovenia, 2007.
- Eastern Finance Association (EFA) Meeting, New Orleans, LA, 2007.
38
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
- Financial Management Association (FMA) Meeting, Chicago, IL, 2005.
- Southern Finance Association (SFA) Meeting, Key West, FL, 2005.
x Measures of Implicit Trading Costs and Buy-Sell Asymmetry
- Western Finance Association (WFA) Meeting (NYSE PhD Student Travel Grant),
Portland, OR, 2005.
- Eastern Finance Association (EFA) Meeting (Best Paper Award), Norfolk, VA, 2005.
- Financial Management Association (FMA) Meeting, FMA Doctoral Student Seminar
and Special PhD Paper Session, New Orleans, LA, 2004.
- Seminars (2003-2005): Babson College, Boston College, California State University
Fullerton, University of Connecticut, Abel/Noser Corporation, Fidelity Investments,
Goldman Sachs.
x The Market for Shareholder-Voting Rights Around Mergers and Acquisitions: Evidence
from Institutional Daily Trading and Voting
- Conference and Special Issue of the Journal of Corporate Finance on Corporate
Control, Mergers and Acquisitions, Atlanta, GA, 2008.
- Financial Management Association (FMA) Meeting, Dallas, 2008.
- Shareholder and Corporate Governance Conference, organized by Yale University and
Oxford University, 2007.
x Legal and Economic Issues in Litigation Arising from the 2007-2008 Credit Crisis
- Brookings-Tokyo Club-Wharton Conference, Prudent Lending Restored: Securitization
After the 2007 Mortgage Securities Meltdown, Washington DC, 2008.
x When is Stock Picking Likely to be Successful? Evidence from Mutual Funds
- Financial Management Association (FMA) Meeting, Chicago, IL, 2005.
- Northern Finance Association (NFA) Meeting, Vancouver, Canada, 2005.
- Babson College Cutler Center for Investments and Finance Board Meeting, 2009.
x Opinion Divergence Among Professional Investment Managers
- Journal of Business Finance and Accounting Capital Markets Conference, University
of North Carolina at Chapel Hill, 2007.
OTHER PROFESSIONAL ACTIVITIES
x Top 1% by downloads of all authors on Social Sciences Research Network (SSRN.com).
x Boston Area Finance Symposium (BAFS) Organizing Committee, 2008-present (founding
member).
x Ad hoc referee for Journal of Financial and Quantitative Analysis, Journal of Financial
Markets, Financial Management, Financial Review, Financial Analyst Journal, and
Journal of Business Finance and Accounting.
39
Exhibit-2
Curriculum Vitae
Gang Hu, Ph.D., CFA
x Selected Babson College Services:
- Chair, Finance Recruiting, 2011-2012.
- Faculty Senate, 2009-2012.
- Faculty Workload and Compensation Committee, 2011-2014.
- Data Analytics Task Force, 2012-2013.
- Faculty Advisor, Chinese Student Association, 2009-present.
- Co-Chair, Finance Recruiting Committee, 2010-2011.
- Organizer of Finance Seminar Series, 2006-2010.
- Committee on Titles, 2010.
- Dean of Faculty Nominating Committee, 2008.
- Fidelity/Babson Affinity Committee, 2005-2007.
x Babson Global Teaching Fellows Program, Faculty Mentor:
- Nauman J . Amin, Institute of Business Administration (IBA), Pakistan, Spring 2012.
- Yanzhao Tang, Xiamen University, China, Fall 2012.
x Babson Honors Thesis Advisor:
- Zann Ali (2011-2012), Lauren Garey (2011-2012), Yimiao Chen (2012-2013), Chia
Chou Pan (2013-2014).
x Financial Management Association (FMA) Annual Meeting: Program Committee 2010,
2009, 2007, 2006; Discussant 2006, 2005; Session Chair 2006.
x Western Finance Association (WFA) Annual Meeting: Discussant 2006.
x Eastern Finance Association (EFA) Annual Meeting: Session Chair and Organizer, 2012;
Program Committee 2008, 2007, 2006; Discussant 2005; Session Chair 2005.
x Southern Finance Association (SFA) Annual Meeting: Program Committee 2007, 2006;
Discussant 2005; Session Chair 2005.
x Midwest Finance Association (MFA) Annual Meeting: Program Committee 2013.
x China International Conference in Finance (CICF): Discussant 2012.
x The Chinese Finance Association (TCFA), Editorial Board, 2001-2004.
x Passed two actuarial exams.
x Member: American Finance Association (AFA), Western Finance Association (WFA),
Financial Management Association (FMA), Eastern Finance Association (EFA), Southern
Finance Association (SFA), CFA Institute, Boston Security Analysts Society (BSAS), and
The Chinese Finance Association (TCFA).
40
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
3/30/2010 $5.98 151,400
3/31/2010 $5.99 364,800 0.17%
4/1/2010 $5.82 993,300 -2.88%
4/5/2010 $6.07 192,200 4.21%
4/6/2010 $6.02 97,800 -0.83%
4/7/2010 $6.18 106,800 2.62%
4/8/2010 $6.39 164,800 3.34%
4/9/2010 $6.27 96,000 -1.90%
4/12/2010 $6.30 71,500 0.48%
4/13/2010 $6.95 497,100 9.82%
4/14/2010 $7.24 463,200 4.09%
4/15/2010 $7.08 159,300 -2.23%
4/16/2010 $6.77 252,200 -4.48%
4/19/2010 $6.74 133,800 -0.44%
4/20/2010 $6.55 85,168 -2.86%
4/21/2010 $6.10 389,618 -7.12%
4/22/2010 $6.03 139,202 -1.15%
4/23/2010 $6.12 111,488 1.44%
4/26/2010 $6.29 214,276 2.78%
4/27/2010 $6.15 104,515 -2.25%
4/28/2010 $6.15 94,224 0.00%
4/29/2010 $6.20 184,692 0.81%
4/30/2010 $6.21 70,376 0.16%
5/3/2010 $6.16 88,360 -0.81%
5/4/2010 $5.93 82,212 -3.81%
5/5/2010 $5.80 107,152 -2.22%
5/6/2010 $5.40 160,494 -7.15%
5/7/2010 $5.22 207,028 -3.39%
5/10/2010 $5.43 75,216 3.94%
5/11/2010 $5.59 51,814 2.90%
5/12/2010 $5.93 126,006 5.90%
5/13/2010 $5.85 131,099 -1.36%
5/14/2010 $5.80 44,855 -0.86%
5/17/2010 $5.96 155,603 2.72%
Exhibit-3
SkyPeople Fruit Juice (SPU) Stock Price, Volume &
Returns
March 30, 2010 through J une 1, 2011
41
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
5/18/2010 $5.63 202,930 -5.70%
5/19/2010 $5.56 110,375 -1.25%
5/20/2010 $5.03 141,259 -10.02%
5/21/2010 $5.27 102,043 4.66%
5/24/2010 $5.41 82,637 2.62%
5/25/2010 $5.12 122,753 -5.51%
5/26/2010 $5.38 41,684 4.96%
5/27/2010 $5.63 38,997 4.54%
5/28/2010 $5.55 35,258 -1.43%
6/1/2010 $5.37 81,094 -3.30%
6/2/2010 $5.37 36,327 0.00%
6/3/2010 $5.37 57,471 0.00%
6/4/2010 $5.36 61,329 -0.19%
6/7/2010 $5.37 58,933 0.19%
6/8/2010 $5.61 83,583 4.37%
6/9/2010 $5.58 61,635 -0.54%
6/10/2010 $5.60 26,302 0.36%
6/11/2010 $5.79 135,324 3.34%
6/14/2010 $5.45 58,901 -6.05%
6/15/2010 $5.43 43,796 -0.37%
6/16/2010 $5.57 45,119 2.55%
6/17/2010 $5.59 42,596 0.36%
6/18/2010 $5.48 20,000 -1.99%
6/21/2010 $5.62 46,798 2.52%
6/22/2010 $5.39 51,854 -4.18%
6/23/2010 $5.40 18,153 0.19%
6/24/2010 $5.24 26,310 -3.01%
6/25/2010 $5.16 49,501 -1.54%
6/28/2010 $5.38 110,116 4.18%
6/29/2010 $5.28 166,258 -1.88%
6/30/2010 $5.05 140,832 -4.45%
7/1/2010 $5.24 155,494 3.69%
7/2/2010 $5.27 28,242 0.57%
7/6/2010 $5.31 51,245 0.76%
42
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
7/7/2010 $5.22 18,546 -1.71%
7/8/2010 $5.23 36,165 0.19%
7/9/2010 $5.30 24,815 1.33%
7/12/2010 $5.30 23,847 0.00%
7/13/2010 $5.33 81,708 0.56%
7/14/2010 $5.35 121,811 0.37%
7/15/2010 $5.39 15,023 0.74%
7/16/2010 $5.36 24,412 -0.56%
7/19/2010 $5.51 34,753 2.76%
7/20/2010 $5.52 13,056 0.18%
7/21/2010 $5.42 29,684 -1.83%
7/22/2010 $5.50 19,203 1.47%
7/23/2010 $5.71 35,363 3.75%
7/26/2010 $6.00 71,841 4.95%
7/27/2010 $5.90 35,853 -1.68%
7/28/2010 $5.89 49,070 -0.17%
7/29/2010 $5.90 9,862 0.17%
7/30/2010 $5.74 20,556 -2.75%
8/2/2010 $5.71 60,674 -0.52%
8/3/2010 $5.77 16,501 1.05%
8/4/2010 $5.93 33,107 2.74%
8/5/2010 $6.29 86,516 5.89%
8/6/2010 $6.23 48,724 -0.96%
8/9/2010 $6.52 142,460 4.55%
8/10/2010 $6.20 136,864 -5.03%
8/11/2010 $5.97 131,051 -3.78%
8/12/2010 $5.92 30,942 -0.84%
8/13/2010 $6.20 54,431 4.62%
8/16/2010 $6.45 309,628 3.95%
8/17/2010 $6.13 113,937 -5.09%
8/18/2010 $6.12 32,176 -0.16%
8/19/2010 $6.13 17,759 0.16%
8/20/2010 $6.31 43,071 2.89%
8/23/2010 $5.64 216,362 -11.23%
43
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
8/24/2010 $5.86 338,639 3.83%
8/25/2010 $4.79 2,067,089 -20.16%
8/26/2010 $4.69 324,038 -2.11%
8/27/2010 $4.90 299,033 4.38%
8/30/2010 $4.90 368,483 0.00%
8/31/2010 $4.73 174,661 -3.53%
9/1/2010 $4.79 347,598 1.26%
9/2/2010 $4.70 125,109 -1.90%
9/3/2010 $4.85 209,279 3.14%
9/7/2010 $4.67 139,274 -3.78%
9/8/2010 $4.61 122,049 -1.29%
9/9/2010 $4.60 73,309 -0.22%
9/10/2010 $4.50 113,939 -2.20%
9/13/2010 $4.51 157,087 0.22%
9/14/2010 $4.57 123,851 1.32%
9/15/2010 $4.55 89,976 -0.44%
9/16/2010 $4.38 62,255 -3.81%
9/17/2010 $4.25 193,629 -3.01%
9/20/2010 $4.21 137,888 -0.95%
9/21/2010 $4.30 137,272 2.12%
9/22/2010 $4.23 40,195 -1.64%
9/23/2010 $4.39 75,801 3.71%
9/24/2010 $4.42 41,095 0.68%
9/27/2010 $4.36 65,284 -1.37%
9/28/2010 $4.49 57,397 2.94%
9/29/2010 $4.65 53,441 3.50%
9/30/2010 $4.68 49,521 0.64%
10/1/2010 $4.73 37,105 1.06%
10/4/2010 $4.73 67,033 0.00%
10/5/2010 $4.54 49,390 -4.10%
10/6/2010 $4.50 65,720 -0.88%
10/7/2010 $4.58 12,028 1.76%
10/8/2010 $4.65 47,003 1.52%
10/11/2010 $4.91 182,410 5.44%
44
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
10/12/2010 $4.93 79,512 0.41%
10/13/2010 $4.97 154,535 0.81%
10/14/2010 $4.94 51,109 -0.61%
10/15/2010 $4.92 50,318 -0.41%
10/18/2010 $5.69 789,667 14.54%
10/19/2010 $5.76 347,328 1.22%
10/20/2010 $5.88 89,141 2.06%
10/21/2010 $5.72 167,865 -2.76%
10/22/2010 $5.69 68,365 -0.53%
10/25/2010 $5.72 148,621 0.53%
10/26/2010 $5.82 255,145 1.73%
10/27/2010 $5.85 175,774 0.51%
10/28/2010 $5.76 36,302 -1.55%
10/29/2010 $5.77 38,409 0.17%
11/1/2010 $5.68 100,506 -1.65%
11/2/2010 $5.69 92,310 0.25%
11/3/2010 $5.70 105,826 0.18%
11/4/2010 $5.71 95,095 0.18%
11/5/2010 $5.64 65,819 -1.23%
11/8/2010 $5.72 98,933 1.41%
11/9/2010 $5.63 81,412 -1.59%
11/10/2010 $5.62 74,126 -0.18%
11/11/2010 $5.69 77,961 1.24%
11/12/2010 $5.60 132,938 -1.59%
11/15/2010 $5.62 90,051 0.36%
11/16/2010 $5.24 316,077 -7.00%
11/17/2010 $5.19 274,769 -0.96%
11/18/2010 $5.13 127,255 -1.16%
11/19/2010 $4.97 185,336 -3.17%
11/22/2010 $4.78 150,011 -3.90%
11/23/2010 $5.01 218,700 4.70%
11/24/2010 $5.01 79,981 0.00%
11/26/2010 $5.14 24,589 2.54%
11/29/2010 $5.06 50,997 -1.55%
45
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
11/30/2010 $4.88 88,323 -3.62%
12/1/2010 $5.03 60,966 3.03%
12/2/2010 $4.87 92,219 -3.23%
12/3/2010 $4.79 111,186 -1.66%
12/6/2010 $4.80 122,778 0.21%
12/7/2010 $4.80 119,371 0.00%
12/8/2010 $4.70 164,696 -2.11%
12/9/2010 $4.72 90,277 0.42%
12/10/2010 $4.67 79,980 -1.06%
12/13/2010 $4.55 155,030 -2.60%
12/14/2010 $4.60 61,977 1.09%
12/15/2010 $4.26 759,060 -7.68%
12/16/2010 $4.08 357,312 -4.32%
12/17/2010 $4.10 140,013 0.49%
12/20/2010 $4.38 106,266 6.60%
12/21/2010 $4.45 113,930 1.59%
12/22/2010 $4.55 146,405 2.22%
12/23/2010 $4.58 83,098 0.66%
12/27/2010 $4.39 109,788 -4.24%
12/28/2010 $4.50 54,089 2.47%
12/29/2010 $4.54 46,516 0.88%
12/30/2010 $4.62 57,398 1.75%
12/31/2010 $4.65 27,389 0.65%
1/3/2011 $4.53 139,259 -2.61%
1/4/2011 $4.41 179,156 -2.68%
1/5/2011 $4.34 207,233 -1.60%
1/6/2011 $4.30 128,965 -0.93%
1/7/2011 $4.33 35,953 0.70%
1/10/2011 $4.53 66,593 4.52%
1/11/2011 $4.70 220,171 3.68%
1/12/2011 $4.85 123,352 3.14%
1/13/2011 $4.90 116,405 1.03%
1/14/2011 $4.94 123,928 0.81%
1/18/2011 $4.92 103,696 -0.41%
46
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
1/19/2011 $4.76 73,659 -3.31%
1/20/2011 $4.62 71,642 -2.99%
1/21/2011 $4.83 190,561 4.45%
1/24/2011 $4.87 72,620 0.82%
1/25/2011 $4.84 44,859 -0.62%
1/26/2011 $4.90 205,151 1.19%
1/27/2011 $4.99 371,704 1.86%
1/28/2011 $4.90 84,473 -1.82%
1/31/2011 $5.16 280,346 5.17%
2/1/2011 $5.00 387,183 -3.15%
2/2/2011 $5.03 555,476 0.51%
2/3/2011 $4.98 355,092 -0.91%
2/4/2011 $4.93 131,571 -1.01%
2/7/2011 $4.85 345,450 -1.64%
2/8/2011 $4.82 190,682 -0.62%
2/9/2011 $4.76 182,618 -1.25%
2/10/2011 $4.79 100,174 0.63%
2/11/2011 $4.68 111,024 -2.32%
2/14/2011 $4.62 161,653 -1.29%
2/15/2011 $4.64 62,418 0.43%
2/16/2011 $4.70 107,433 1.28%
2/17/2011 $4.79 75,654 1.90%
2/18/2011 $4.76 51,801 -0.63%
2/22/2011 $4.66 82,984 -2.12%
2/23/2011 $4.60 77,423 -1.30%
2/24/2011 $4.62 117,595 0.43%
2/25/2011 $4.80 111,872 3.82%
2/28/2011 $4.93 401,193 2.67%
3/1/2011 $4.86 141,381 -1.43%
3/2/2011 $4.74 109,707 -2.50%
3/3/2011 $4.60 306,835 -3.00%
3/4/2011 $4.59 142,791 -0.22%
3/7/2011 $4.63 238,098 0.87%
3/8/2011 $4.87 163,161 5.05%
47
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
3/9/2011 $4.75 119,071 -2.49%
3/10/2011 $4.62 152,102 -2.77%
3/11/2011 $4.51 189,586 -2.41%
3/14/2011 $4.35 227,454 -3.61%
3/15/2011 $4.18 216,804 -3.99%
3/16/2011 $4.14 66,191 -0.96%
3/17/2011 $4.22 36,878 1.91%
3/18/2011 $4.37 73,704 3.49%
3/21/2011 $4.35 108,047 -0.46%
3/22/2011 $4.34 85,932 -0.23%
3/23/2011 $4.38 112,448 0.92%
3/24/2011 $4.32 146,718 -1.38%
3/25/2011 $4.33 95,322 0.23%
3/28/2011 $4.45 153,493 2.73%
3/29/2011 $4.41 95,184 -0.90%
3/30/2011 $4.23 173,354 -4.17%
3/31/2011 $4.41 230,787 4.17%
4/1/2011 $3.85 897,301 -13.58%
4/4/2011 $3.57 670,684 -7.55%
4/5/2011 $3.79 339,246 5.98%
4/6/2011 $3.85 242,585 1.57%
4/7/2011 $3.93 125,279 2.06%
4/8/2011 $3.65 193,982 -7.39%
4/11/2011 $3.56 167,847 -2.50%
4/12/2011 $3.72 184,302 4.40%
4/13/2011 $3.60 127,193 -3.28%
4/14/2011 $3.66 184,685 1.65%
4/15/2011 $3.88 531,841 5.84%
4/18/2011 $3.80 192,204 -2.08%
4/19/2011 $3.92 186,754 3.11%
4/20/2011 $4.03 53,360 2.77%
4/21/2011 $4.00 651,663 -0.75%
4/25/2011 $3.87 78,449 -3.30%
4/26/2011 $3.82 48,072 -1.43%
48
Date
SPU Closing
Price
SPU Trading
Volume
SPU
Logarithmic
Return
Exhibit-3
Returns
4/27/2011 $3.70 122,416 -3.06%
4/28/2011 $3.11 726,001 -17.53%
4/29/2011 $3.20 317,980 3.01%
5/2/2011 $3.25 147,993 1.40%
5/3/2011 $3.23 183,485 -0.46%
5/4/2011 $3.21 164,608 -0.62%
5/5/2011 $3.14 110,283 -2.20%
5/6/2011 $3.23 167,926 2.83%
5/9/2011 $3.22 67,852 -0.31%
5/10/2011 $3.29 109,506 2.00%
5/11/2011 $3.37 181,268 2.55%
5/12/2011 $3.62 105,793 7.16%
5/13/2011 $3.43 89,803 -5.39%
5/16/2011 $3.41 146,005 -0.58%
5/17/2011 $3.60 149,361 5.42%
5/18/2011 $3.62 138,853 0.55%
5/19/2011 $3.67 169,564 1.24%
5/20/2011 $3.51 89,350 -4.32%
5/23/2011 $3.35 95,775 -4.67%
5/24/2011 $3.26 170,998 -2.72%
5/25/2011 $3.10 230,279 -5.03%
5/26/2011 $2.98 263,792 -3.95%
5/27/2011 $2.81 248,068 -5.87%
5/31/2011 $2.55 599,681 -9.71%
6/1/2011 $2.08 1,691,579 -20.37%
Source: CRSP
49
Exhibit-4
Market Makers in SkyPeople (SPU) Common Stock
April 2010 to May 2011
Name Volume
KNIGHT EQUITY MARKETS, L.P. 5,381,137
UBS SECURITIES LLC. 2,906,896
WEDBUSH MORGAN SECURITIES INC. 1,772,130
CITADEL SECURITIES LLC 1,626,324
MORGAN STANLEY & CO., INCORPOR 1,564,961
PERSHING TRADING COMPANY L.P. 1,385,477
PENSON FINANCIAL SERVICES, INC. 1,296,770
INTERACTIVE BROKERS LLC 1,114,053
CITIGROUP GLOBAL MARKETS INC. 1,112,819
MERRILL LYNCH 1,110,441
AMERITRADE, INC. 904,030
RODMAN AND RENSHAW LLC 867,934
NATIONAL FINANCIAL SERVICES LL 841,530
LIME BROKERAGE LLC 781,822
SCOTTRADE, INC. 701,356
GOLDMAN SACHS 673,015
INSTINET CORPORATION 616,372
BARCLAYS CAPITAL INC. 582,854
CREDIT SUISSE FIRST BOSTON LLC 403,099
CHARLES SCHWAB AND CO. INC. 344,703
T.R. WINSTON & COMPANY, LLC 293,469
ROTH CAPITAL PARTNERS, LLC 267,412
MEYERS ASSOCIATES, L.P. 252,977
J .P. MORGAN SECURITIES INC. 221,604
E*TRADE CLEARING LLC 219,419
WEDBUSH SECURITIES INC. 194,744
HELFANT GROUP, INC. 135,277
ELECTRONIC TRANSACTION CLEARING, INC. 126,428
E*TRADE CAPITAL MKTS LLC 121,732
DEUTSCHE BANK SECURITIES INC. 114,822
RBC CAPITAL MARKETS 104,203
ASSENT LLC 98,326
ITG INC. 93,005
FOLIOFN INVESTMENTS, INC. 89,744
50
Exhibit-4
Name Volume
ROSENBLATT SECURITIES INC. 82,237
J EFFERIES & COMPANY, INC. 80,303
OPPENHEIMER & CO. INC. 76,696
SLOAN SECURITIES CORP 75,000
CANTOR FITZGERALD & CO. 70,872
M.S. HOWELLS & CO. 69,200
TRIAD SECURITIES CORP 69,000
SUSQUEHANNA CAPITAL GROUP 67,593
SECURITIES INVESTMENT PLANNING 66,900
FIRST CLEARING, LLC 63,590
TRADEBOT SYSTEMS, INC. 63,197
DAIN CORRESPONDENT SERVICES 62,226
EBX LLC 59,000
DART EXECUTIONS, LLC 53,588
ALTERNET SECURITIES, INC. 51,695
BRUT, LLC 48,745
US CLEARING CORP DIV OF FLEET 46,894
PACIFIC AMERICAN SECURITIES LL 44,800
NOMURA SECURITIES INTERNATIONA 40,935
MERRILL LYNCH PRO CLEARING COR 40,767
O'CONNOR & COMPANY LLC 35,585
VANGUARD BROKERAGE SERVICES 34,256
FIMAT USA, INC. 34,115
WELLS FARGO INVESTMENTS, LLC 31,211
NORMANDY SECURITIES INC. 30,091
PENSON FINANCIAL SERVICES, INC. 29,900
MERLIN SECURITIES, LLC 26,900
WEEDEN & CO.L.P. 25,564
HARRIS NESBITT CORP. 23,770
BANCA IMI SECURITIES CORP. 23,075
SUBERT SECURITIES INC. 21,008
J ERICHO INVESTMENTS, LLC 20,449
BNY BROKERAGE INC. 20,153
51
Exhibit-4
Name Volume
WOLVERINE EXECUTION SERVICES, 18,822
MONNESS CRESPI HARDT AND CO. I 18,400
HUDSON SECURITIES 16,500
MKM PARTNERS 15,016
ZACKS & COMPANY 14,134
CIBC WORLD MARKETS INC. (CDS) 13,536
SUCCESS TRADE 13,460
OPTIONSXPRESS, INC. 13,135
BREAN MURRAY AND CO. INC. 12,931
NEONET SECURITIES, INC. 11,780
TIMBER HILL LLC 11,521
GRACE FINANCIAL GROUP LLC 11,300
DOMESTIC SECURITIES, INC. 11,107
PULSE TRADING INC. 11,000
MAN SECURITIES INC. 10,565
FOX RIVER EXECUTION TEHNOLOGY, LLC 10,039
PINNACLE CAPITAL MARKETS, INC. 10,000
TERRA NOVA TRADING 9,895
NORTHPOINT TRADING PARTNERS, LLC 9,645
BRIARCLIFF CAPITAL CORP. 9,077
SOUTHWEST SECURITIES, INC. 8,800
BAYPOINT TRADING LLC 7,800
LINSCO/PRIVATE LEDGER CORP. 7,640
WUNDERLICH SECURITIES INC. 6,604
MOORS AND CABOT INC. 6,550
NESBITT BURNS INC. 6,157
TD SECURITIES INC. 5,950
THINKORSWIM, INC. 5,650
SANDERS MORRIS HARRIS INC. 5,596
UBS FINANCIAL SERVICES INC. 5,300
LABRANCHE FINANCIAL SERVICES, 5,271
FIRST NEW YORK SECURITIES CO 5,000
LEGEND SECURITIES, INC. 5,000
PICTET OVERSEAS INC. 5,000
RAYMOND J AMES AND ASSOCIATES I 4,820
52
Exhibit-4
Name Volume
INTERNATIONAL CORRESPONDENT TR 4,640
ELECTRONIC BROKERAGE SYSTEMS, LLC 4,523
BTIG, LLC 4,200
THE GRISWOLD COMPANY, INCORPOR 4,100
B. RILEY AND CO. INC. 4,000
J ONES AND ASSOCIATES INC. 3,900
USAA INVESTMENT MANAGEMENT COM 3,595
FIRST SOUTHWEST CO. 3,500
BROWN BROTHERS HARRIMAN 3,400
LADENBURG, THALMANN & CO. INC. 3,000
TRACK DATA SECURITIES CORP. 2,982
STIFEL NICOLAUS 2,931
STATE STREET GLOBAL MARKETS, L 2,900
STERNE AGEE AND LEACH INC. 2,700
TRADESTATION SECURITIES, INC. 2,700
NBCN CLEARING, INC./CDS 2,655
BOENNING AND SCATTERGOOD INC. 2,600
AMERICAN ENTERPRISE INVESTMENT 2,335
LAMPOST CAPITAL LLC 2,330
U.S. BANCORP INVESTMENTS, INC. 2,300
YAMNER AND CO. INC. 2,300
CUTTONE & CO., INC. 2,000
CANACCORD CAPITAL (U.S.A.), IN 1,679
COLLINS STEWART INC. 1,665
J NK SECURITIES CORP. 1,608
EDWARD D. J ONES & CO., L.P. 1,600
WILLIAM BLAIR & COMPANY L.L.C. 1,600
J J B HILLIARD W L LYONS 1,500
CHARDAN CAPITAL MARKETS LLC 1,300
BIREMIS LLC 1,200
STOCK USA INVESTMENTS 1,200
SANFORD C. BERNSTEIN AND CO. I 1,100
MILLENCO 1,000
PAULSON INVESTMENT CO. INC. 875
GFI SECURITIES LLC 800
53
Exhibit-4
Name Volume
ELECTRONIC BROKERAGE SYSTEMS I 691
ROBERT W. BAIRD & CO. INCORPOR 620
MAXIM GROUP, LLC 600
SJ LEVINSON LLC 600
GETCO EXECUTION SERVICES LLC. 519
MAJ OR LEAGUE SECURITIES INC. 500
HSBC SECURITIES (USA) INC. 467
GILFORD SECURITIES INC. 400
KERSHNER SECURITIES, LLC 400
SPARTAN SECURITIES GROUP LTD 300
THE GAUSSIAN GROUP, LLC 250
PRIMEVEST FINANCIAL SERVICES, 200
LEK SECURITIES CORPORATION 100
MB TRADING 99
COWEN & CO., LLC 19
Source: Bloomberg LP
54
Exhibit-5
Market & Peer Index Levels & Returns
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
3/30/2010 3,297.17 594.37
3/31/2010 3,287.80 585.85 -0.28% -1.44%
4/1/2010 3,315.91 595.46 0.85% 1.63%
4/5/2010 3,347.90 601.86 0.96% 1.07%
4/6/2010 3,354.97 601.27 0.21% -0.10%
4/7/2010 3,336.73 596.14 -0.55% -0.86%
4/8/2010 3,346.46 600.84 0.29% 0.79%
4/9/2010 3,368.90 607.58 0.67% 1.12%
4/12/2010 3,375.25 602.57 0.19% -0.83%
4/13/2010 3,377.76 600.89 0.07% -0.28%
4/14/2010 3,419.79 609.71 1.24% 1.46%
4/15/2010 3,420.22 610.56 0.01% 0.14%
4/16/2010 3,365.00 591.46 -1.63% -3.18%
4/19/2010 3,373.12 585.03 0.24% -1.09%
4/20/2010 3,406.45 595.08 0.98% 1.70%
4/21/2010 3,404.52 589.63 -0.06% -0.92%
4/22/2010 3,416.91 593.42 0.36% 0.64%
4/23/2010 3,442.50 597.30 0.75% 0.65%
4/26/2010 3,431.20 596.37 -0.33% -0.16%
4/27/2010 3,348.74 575.77 -2.43% -3.52%
4/28/2010 3,366.43 575.94 0.53% 0.03%
4/29/2010 3,412.72 584.97 1.37% 1.56%
4/30/2010 3,354.36 581.74 -1.72% -0.55%
5/3/2010 3,398.20 583.80 1.30% 0.35%
5/4/2010 3,311.77 559.03 -2.58% -4.34%
5/5/2010 3,281.32 552.09 -0.92% -1.25%
5/6/2010 3,173.39 529.77 -3.34% -4.13%
5/7/2010 3,121.91 527.70 -1.64% -0.39%
5/10/2010 3,263.20 561.25 4.43% 6.16%
5/11/2010 3,260.30 555.05 -0.09% -1.11%
5/12/2010 3,313.96 567.52 1.63% 2.22%
5/13/2010 3,277.64 562.49 -1.10% -0.89%
5/14/2010 3,213.44 547.83 -1.98% -2.64%
5/17/2010 3,211.87 539.05 -0.05% -1.62%
5/18/2010 3,167.75 538.49 -1.38% -0.10%
55
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
5/19/2010 3,145.23 528.92 -0.71% -1.79%
5/20/2010 3,016.81 506.59 -4.17% -4.31%
5/21/2010 3,063.20 524.65 1.53% 3.50%
5/24/2010 3,025.68 522.81 -1.23% -0.35%
5/25/2010 3,025.41 515.66 -0.01% -1.38%
5/26/2010 3,016.59 514.29 -0.29% -0.27%
5/27/2010 3,123.21 542.14 3.47% 5.27%
5/28/2010 3,086.08 536.52 -1.20% -1.04%
6/1/2010 3,028.16 524.97 -1.89% -2.18%
6/2/2010 3,109.68 537.90 2.66% 2.43%
6/3/2010 3,125.22 539.95 0.50% 0.38%
6/4/2010 3,011.63 521.90 -3.70% -3.40%
6/7/2010 2,968.53 511.45 -1.44% -2.02%
6/8/2010 2,996.07 519.16 0.92% 1.50%
6/9/2010 2,984.34 518.87 -0.39% -0.06%
6/10/2010 3,073.57 538.35 2.95% 3.69%
6/11/2010 3,092.77 541.84 0.62% 0.65%
6/14/2010 3,092.65 542.32 0.00% 0.09%
6/15/2010 3,167.16 557.40 2.38% 2.74%
6/16/2010 3,163.33 557.11 -0.12% -0.05%
6/17/2010 3,166.10 551.34 0.09% -1.04%
6/18/2010 3,171.48 554.19 0.17% 0.52%
6/21/2010 3,157.33 567.76 -0.45% 2.42%
6/22/2010 3,105.66 556.45 -1.65% -2.01%
6/23/2010 3,096.25 561.58 -0.30% 0.92%
6/24/2010 3,045.15 551.57 -1.66% -1.80%
6/25/2010 3,063.31 556.23 0.59% 0.84%
6/28/2010 3,053.99 555.86 -0.30% -0.07%
6/29/2010 2,952.24 531.37 -3.39% -4.51%
6/30/2010 2,925.31 532.39 -0.92% 0.19%
7/1/2010 2,913.74 536.15 -0.40% 0.70%
7/2/2010 2,902.94 533.10 -0.37% -0.57%
7/6/2010 2,912.50 532.72 0.33% -0.07%
7/7/2010 3,003.87 543.47 3.09% 2.00%
7/8/2010 3,033.13 540.84 0.97% -0.49%
56
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
7/9/2010 3,060.44 548.85 0.90% 1.47%
7/12/2010 3,056.66 544.73 -0.12% -0.75%
7/13/2010 3,109.90 552.70 1.73% 1.45%
7/14/2010 3,107.87 549.91 -0.07% -0.51%
7/15/2010 3,109.27 548.74 0.04% -0.21%
7/16/2010 3,019.48 536.23 -2.93% -2.31%
7/19/2010 3,034.72 540.05 0.50% 0.71%
7/20/2010 3,073.36 550.55 1.26% 1.93%
7/21/2010 3,033.36 547.82 -1.31% -0.50%
7/22/2010 3,105.46 564.01 2.35% 2.91%
7/23/2010 3,135.84 568.86 0.97% 0.86%
7/26/2010 3,172.92 572.89 1.18% 0.71%
7/27/2010 3,164.98 570.00 -0.25% -0.51%
7/28/2010 3,140.85 565.99 -0.77% -0.71%
7/29/2010 3,132.26 563.81 -0.27% -0.39%
7/30/2010 3,136.91 573.16 0.15% 1.64%
8/2/2010 3,201.94 585.94 2.05% 2.21%
8/3/2010 3,185.11 581.57 -0.53% -0.75%
8/4/2010 3,209.37 589.20 0.76% 1.30%
8/5/2010 3,201.25 591.07 -0.25% 0.32%
8/6/2010 3,189.53 589.41 -0.37% -0.28%
8/9/2010 3,208.53 593.25 0.59% 0.65%
8/10/2010 3,182.61 582.43 -0.81% -1.84%
8/11/2010 3,088.65 565.60 -3.00% -2.93%
8/12/2010 3,073.77 565.81 -0.48% 0.04%
8/13/2010 3,061.41 565.67 -0.40% -0.02%
8/16/2010 3,065.52 568.83 0.13% 0.56%
8/17/2010 3,108.84 573.29 1.40% 0.78%
8/18/2010 3,116.28 571.17 0.24% -0.37%
8/19/2010 3,063.26 572.10 -1.72% 0.16%
8/20/2010 3,053.08 573.47 -0.33% 0.24%
8/23/2010 3,038.17 566.33 -0.49% -1.25%
8/24/2010 2,993.39 558.09 -1.48% -1.47%
8/25/2010 3,007.40 557.00 0.47% -0.20%
8/26/2010 2,986.95 554.63 -0.68% -0.43%
57
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
8/27/2010 3,042.93 566.63 1.86% 2.14%
8/30/2010 2,998.96 557.08 -1.46% -1.70%
8/31/2010 2,999.11 560.95 0.00% 0.69%
9/1/2010 3,087.62 574.88 2.91% 2.45%
9/2/2010 3,117.67 577.66 0.97% 0.48%
9/3/2010 3,158.96 583.59 1.32% 1.02%
9/7/2010 3,120.83 573.51 -1.21% -1.74%
9/8/2010 3,140.83 574.46 0.64% 0.17%
9/9/2010 3,152.94 577.10 0.38% 0.46%
9/10/2010 3,167.29 578.76 0.45% 0.29%
9/13/2010 3,208.21 595.55 1.28% 2.86%
9/14/2010 3,207.45 595.16 -0.02% -0.07%
9/15/2010 3,217.20 595.68 0.30% 0.09%
9/16/2010 3,214.88 597.32 -0.07% 0.27%
9/17/2010 3,218.78 596.67 0.12% -0.11%
9/20/2010 3,268.16 607.02 1.52% 1.72%
9/21/2010 3,257.58 606.15 -0.32% -0.14%
9/22/2010 3,240.76 605.58 -0.52% -0.09%
9/23/2010 3,214.10 606.24 -0.83% 0.11%
9/24/2010 3,283.20 620.64 2.13% 2.35%
9/27/2010 3,268.17 620.67 -0.46% 0.00%
9/28/2010 3,287.15 623.34 0.58% 0.43%
9/29/2010 3,283.37 627.42 -0.11% 0.65%
9/30/2010 3,276.61 624.76 -0.21% -0.42%
10/1/2010 3,292.60 625.63 0.49% 0.14%
10/4/2010 3,264.83 625.65 -0.85% 0.00%
10/5/2010 3,332.59 639.50 2.05% 2.19%
10/6/2010 3,331.14 632.86 -0.04% -1.04%
10/7/2010 3,324.37 629.96 -0.20% -0.46%
10/8/2010 3,349.67 634.07 0.76% 0.65%
10/11/2010 3,351.49 643.54 0.05% 1.48%
10/12/2010 3,364.31 641.81 0.38% -0.27%
10/13/2010 3,393.69 650.91 0.87% 1.41%
10/14/2010 3,380.69 649.19 -0.38% -0.26%
10/15/2010 3,383.46 652.50 0.08% 0.51%
58
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
10/18/2010 3,405.25 656.90 0.64% 0.67%
10/19/2010 3,346.70 639.62 -1.73% -2.67%
10/20/2010 3,384.50 650.26 1.12% 1.65%
10/21/2010 3,385.94 653.75 0.04% 0.54%
10/22/2010 3,395.03 656.01 0.27% 0.35%
10/25/2010 3,407.44 673.44 0.37% 2.62%
10/26/2010 3,406.09 674.27 -0.04% 0.12%
10/27/2010 3,395.33 663.82 -0.32% -1.56%
10/28/2010 3,398.87 662.34 0.10% -0.22%
10/29/2010 3,404.33 664.87 0.16% 0.38%
11/1/2010 3,404.71 673.17 0.01% 1.24%
11/2/2010 3,435.58 680.03 0.90% 1.01%
11/3/2010 3,447.51 683.76 0.35% 0.55%
11/4/2010 3,516.29 689.42 1.98% 0.82%
11/5/2010 3,530.86 690.64 0.41% 0.18%
11/8/2010 3,527.59 702.29 -0.09% 1.67%
11/9/2010 3,497.89 690.68 -0.85% -1.67%
11/10/2010 3,516.97 693.74 0.54% 0.44%
11/11/2010 3,504.23 696.51 -0.36% 0.40%
11/12/2010 3,457.60 676.24 -1.34% -2.95%
11/15/2010 3,453.40 672.69 -0.12% -0.53%
11/16/2010 3,395.05 652.87 -1.70% -2.99%
11/17/2010 3,400.49 657.67 0.16% 0.73%
11/18/2010 3,453.48 668.34 1.55% 1.61%
11/19/2010 3,466.75 662.70 0.38% -0.85%
11/22/2010 3,465.70 664.65 -0.03% 0.29%
11/23/2010 3,416.65 648.60 -1.43% -2.44%
11/24/2010 3,470.87 663.17 1.57% 2.22%
11/26/2010 3,447.49 656.16 -0.68% -1.06%
11/29/2010 3,444.03 661.54 -0.10% 0.82%
11/30/2010 3,423.66 646.31 -0.59% -2.33%
12/1/2010 3,495.63 659.42 2.08% 2.01%
12/2/2010 3,538.69 671.42 1.22% 1.80%
12/3/2010 3,552.41 676.54 0.39% 0.76%
12/6/2010 3,552.36 681.70 0.00% 0.76%
59
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
12/7/2010 3,553.68 681.79 0.04% 0.01%
12/8/2010 3,559.85 669.83 0.17% -1.77%
12/9/2010 3,572.97 676.86 0.37% 1.04%
12/10/2010 3,596.40 677.99 0.65% 0.17%
12/13/2010 3,596.49 672.83 0.00% -0.76%
12/14/2010 3,597.62 664.09 0.03% -1.31%
12/15/2010 3,579.13 657.02 -0.52% -1.07%
12/16/2010 3,600.50 651.47 0.60% -0.85%
12/17/2010 3,606.11 651.22 0.16% -0.04%
12/20/2010 3,612.75 651.07 0.18% -0.02%
12/21/2010 3,638.81 665.52 0.72% 2.20%
12/22/2010 3,650.43 666.86 0.32% 0.20%
12/23/2010 3,646.08 661.09 -0.12% -0.87%
12/27/2010 3,648.61 658.58 0.07% -0.38%
12/28/2010 3,651.28 653.57 0.07% -0.76%
12/29/2010 3,660.83 657.34 0.26% 0.58%
12/30/2010 3,657.81 656.63 -0.08% -0.11%
12/31/2010 3,656.36 658.30 -0.04% 0.25%
1/3/2011 3,698.08 672.80 1.13% 2.18%
1/4/2011 3,683.81 679.16 -0.39% 0.94%
1/5/2011 3,704.45 682.01 0.56% 0.42%
1/6/2011 3,695.52 680.46 -0.24% -0.23%
1/7/2011 3,688.53 677.12 -0.19% -0.49%
1/10/2011 3,685.92 681.14 -0.07% 0.59%
1/11/2011 3,704.36 693.51 0.50% 1.80%
1/12/2011 3,737.63 700.44 0.89% 0.99%
1/13/2011 3,730.83 700.86 -0.18% 0.06%
1/14/2011 3,756.32 698.83 0.68% -0.29%
1/18/2011 3,764.35 705.91 0.21% 1.01%
1/19/2011 3,717.42 701.00 -1.25% -0.70%
1/20/2011 3,703.77 692.72 -0.37% -1.19%
1/21/2011 3,708.86 690.78 0.14% -0.28%
1/24/2011 3,732.61 696.11 0.64% 0.77%
1/25/2011 3,731.14 690.78 -0.04% -0.77%
1/26/2011 3,758.63 699.40 0.73% 1.24%
60
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
1/27/2011 3,767.26 706.90 0.23% 1.07%
1/28/2011 3,701.60 687.79 -1.76% -2.74%
1/31/2011 3,730.04 702.91 0.77% 2.17%
2/1/2011 3,794.13 720.02 1.70% 2.41%
2/2/2011 3,785.74 721.55 -0.22% 0.21%
2/3/2011 3,797.00 720.05 0.30% -0.21%
2/4/2011 3,805.62 722.75 0.23% 0.37%
2/7/2011 3,829.50 721.05 0.63% -0.24%
2/8/2011 3,847.14 725.93 0.46% 0.67%
2/9/2011 3,834.30 715.84 -0.33% -1.40%
2/10/2011 3,839.98 725.83 0.15% 1.39%
2/11/2011 3,863.71 735.33 0.62% 1.30%
2/14/2011 3,876.94 734.95 0.34% -0.05%
2/15/2011 3,864.26 730.74 -0.33% -0.57%
2/16/2011 3,893.60 735.10 0.76% 0.59%
2/17/2011 3,908.89 738.00 0.39% 0.39%
2/18/2011 3,913.39 738.41 0.12% 0.06%
2/22/2011 3,830.22 705.66 -2.15% -4.54%
2/23/2011 3,804.28 697.81 -0.68% -1.12%
2/24/2011 3,804.08 707.03 -0.01% 1.31%
2/25/2011 3,853.50 718.41 1.29% 1.60%
2/28/2011 3,874.06 722.87 0.53% 0.62%
3/1/2011 3,815.19 715.13 -1.53% -1.08%
3/2/2011 3,825.86 715.46 0.28% 0.05%
3/3/2011 3,888.43 725.09 1.62% 1.34%
3/4/2011 3,864.76 725.32 -0.61% 0.03%
3/7/2011 3,827.92 715.80 -0.96% -1.32%
3/8/2011 3,859.26 728.74 0.82% 1.79%
3/9/2011 3,849.52 731.54 -0.25% 0.38%
3/10/2011 3,772.93 721.86 -2.01% -1.33%
3/11/2011 3,799.58 727.89 0.70% 0.83%
3/14/2011 3,778.35 725.41 -0.56% -0.34%
3/15/2011 3,736.45 715.59 -1.11% -1.36%
3/16/2011 3,673.66 695.46 -1.69% -2.85%
3/17/2011 3,718.72 696.35 1.22% 0.13%
61
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
3/18/2011 3,736.52 688.95 0.48% -1.07%
3/21/2011 3,798.46 709.29 1.64% 2.91%
3/22/2011 3,785.80 710.39 -0.33% 0.15%
3/23/2011 3,796.42 720.04 0.28% 1.35%
3/24/2011 3,829.37 727.79 0.86% 1.07%
3/25/2011 3,841.75 730.12 0.32% 0.32%
3/28/2011 3,828.93 728.79 -0.33% -0.18%
3/29/2011 3,856.73 740.60 0.72% 1.61%
3/30/2011 3,888.50 746.45 0.82% 0.79%
3/31/2011 3,885.61 754.51 -0.07% 1.07%
4/1/2011 3,906.83 766.24 0.54% 1.54%
4/4/2011 3,911.04 780.25 0.11% 1.81%
4/5/2011 3,916.24 778.69 0.13% -0.20%
4/6/2011 3,922.89 774.83 0.17% -0.50%
4/7/2011 3,913.97 779.51 -0.23% 0.60%
4/8/2011 3,899.87 782.98 -0.36% 0.44%
4/11/2011 3,881.66 779.35 -0.47% -0.46%
4/12/2011 3,845.74 764.32 -0.93% -1.95%
4/13/2011 3,850.50 777.95 0.12% 1.77%
4/14/2011 3,851.95 780.94 0.04% 0.38%
4/15/2011 3,867.21 783.16 0.40% 0.28%
4/18/2011 3,822.09 783.81 -1.17% 0.08%
4/19/2011 3,843.98 795.21 0.57% 1.44%
4/20/2011 3,898.87 798.91 1.42% 0.46%
4/21/2011 3,921.84 802.17 0.59% 0.41%
4/25/2011 3,914.55 805.69 -0.19% 0.44%
4/26/2011 3,947.11 798.19 0.83% -0.94%
4/27/2011 3,971.34 794.92 0.61% -0.41%
4/28/2011 3,983.29 794.24 0.30% -0.09%
4/29/2011 3,995.54 799.69 0.31% 0.68%
5/2/2011 3,981.66 798.87 -0.35% -0.10%
5/3/2011 3,955.69 775.05 -0.65% -3.03%
5/4/2011 3,924.57 764.23 -0.79% -1.41%
5/5/2011 3,888.22 764.39 -0.93% 0.02%
5/6/2011 3,905.97 774.61 0.46% 1.33%
62
Exhibit-5
Date
CRSP Market
Total Return
Index Level
[1]
CBOE China
Index Level
[2]
Market Index
Logarithmic
Return
Peer Index
Logarithmic
Return
5/9/2011 3,929.76 783.77 0.61% 1.18%
5/10/2011 3,963.31 784.29 0.85% 0.07%
5/11/2011 3,915.12 770.78 -1.22% -1.74%
5/12/2011 3,931.29 763.60 0.41% -0.94%
5/13/2011 3,896.26 749.60 -0.90% -1.85%
5/16/2011 3,868.65 738.56 -0.71% -1.48%
5/17/2011 3,866.06 737.53 -0.07% -0.14%
5/18/2011 3,907.89 743.62 1.08% 0.82%
5/19/2011 3,917.44 747.86 0.24% 0.57%
5/20/2011 3,890.40 735.27 -0.69% -1.70%
5/23/2011 3,839.60 710.34 -1.31% -3.45%
5/24/2011 3,837.31 714.15 -0.06% 0.53%
5/25/2011 3,856.94 718.10 0.51% 0.55%
5/26/2011 3,877.45 721.53 0.53% 0.48%
5/27/2011 3,897.10 733.23 0.51% 1.61%
5/31/2011 3,937.26 746.30 1.03% 1.77%
6/1/2011 3,845.06 732.86 -2.37% -1.82%
Sources:
[1] CRSP
[2] Capital IQ
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5
EXHIBIT 2
DECLARATION OF ZACHARY LEWY
I, Zachary Lewy, declare, under penalty of perjury as follows:
1. I submit this declaration in support of my motion for Class
Certification and for my appointment as oneof theClass Representatives.
2. I have read the initial complaint, andread and authorized the filing of
the Consolidated Amended Complaint (the "Complaint") that was filed against
defendants SkyPeople Fruit J uice, Inc., ("SkyPeople"), Yongke Xue, Hongke
Xue, Xiaoqin Yan, Spring Liu, Norman Ko, Guolin Wang, (together with
SkyPeople, the " SkyPeople Defendants"), bankrupt defendant Rodman &
Renshaw, LLC ("Rodman") and former defendants BDO Limited, and Child, Van
Wagoner & Bradshaw, PLLC. I believe theaction tobemeritorious.
3. I amawarethat I amtheLead Plaintiff inthis case.
4. I amaware that the Complaint alleges, among other things, that the
SkyPeople Defendants violated Sections 10(b) and 20(a) of the Securities and
Exchange Act of 1934 (the "Exchange Act") by making materially false and
misleading statements. Among other things, the Complaint charges that
SkyPeople's revenues in 2009 were about $3,859,000, but that the SkyPeople
Defendants represented to U.S. investors that SkyPeople had earned $59,250,000
that year.
5. I amaware that a class action lawsuit, like this one, is brought on
behalf of not only myself but other shareholders that have been wronged in the
sameway by Defendants.
6. I understand that I amseeking to represent aclass of all persons who
bought or acquired SkyPeople common stock between March 31, 2010, and J une
1, 2011.
7. I understand that in September 2012, the Court denied in part the
SkyPeople Defendants' motions to dismiss the claims I assert. Thus, the case has
moved into discovery.
8. I have communicated with counsel throughout the course of this
action. I have responded to discovery. My deposition is scheduled to take place on
J uly 12,2013.
9. I understand that a class representative is arepresentative party who
acts on behalf of other class members in directing the litigation. I amwilling to
serveas aclass representative either individually or aspart of agroup.
10. I understand that as a class representative, I have a fiduciary
responsibility to the absent class members to oversee the litigation and ensure that
counsel for plaintiffs prosecute the case vigorously and in the interest of all class
members equally.
11. I understand that the other proposed class representatives are
Benjamin Padnos andEric Klement.
12. I will continue to communicate with the Rosen Law Firmabout the
status of the litigation, case strategies, settlement negotiations, and other matters
pertinent to overseeing the litigation.
13. Throughout the course of this litigation, I have independently
monitored news about SkyPeople through internet financial sites. Even prior to
my involvement inthis action, I monitored SkyPeople news releases and its stock
price. I will continue independently to monitor SkyPeople developments through
news and internet sources, independent of any information that I may receive or
demand fromcounsel.
14. I understand that, as a class representative, my duties may include
consulting with plaintiffs' counsel on proposed strategies and tactics during the
course of the litigation, making recommendations as to whether or not to accept a
particular settlement offer, andtestifying at deposition and trial. I accept and will
diligently performall such duties.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing istrue and correct.
Executed this~iday of J une, 2013
EXHIBIT 3
EXHIBIT 4
DECLARATION OF BENJAMIN PADNOS
I, Benjamin Padnos, declare, under penalty of perjury as follows:
1. I submit this declaration in support of my motion for Class
Certification and for my appointment as one of the Class Representatives.
2. I have read the initial complaint, and read and authorized the filing of
the Consolidated Amended Complaint (the Complaint) that was filed against
defendants SkyPeople Fruit J uice, Inc., (SkyPeople), Yongke Xue, Hongke
Xue, Xiaoqin Yan, Spring Liu, Norman Ko, Guolin Wang, (together with
SkyPeople, the Defendants), bankrupt defendant Rodman & Renshaw, LLC
(Rodman) and former defendants BDO Limited, and Child, Van Wagoner &
Bradshaw, PLLC. I believe the action to be meritorious. I have also participated
in discovery and have had my deposition taken by Defendants.
3. I am aware that the Complaint alleges, among other things, that
Defendants violated Sections 11 and 15 of the Securities Act of 1933 (the
Securities Act) by making false statements in a registration statement (the
Registration Statement) for an offering in which I bought shares on August 30,
2010. The Complaint alleges that the SkyPeople Defendants omitted to disclose a
related party transaction whose omission made SkyPeoples financial statements
false and misleading. The related party transaction at issue in the Complaint is
SkyPeoples acquisition of Yingkou Trusty Fruits Co., Ltd. (Yingkou) for about
$3.3 million in a transaction that closed in November 2009. The Registration
Statement incorporated SkyPeoples 2008 and 2009 financial statements, and the
Complaint alleges that SkyPeoples 2008 financial statement overstated its
revenues by at least 290%, and that for fiscal year 2009, SkyPeople overstated its
revenues by over 1,000%.
4. I am aware that a class action lawsuit, like this one, is brought on
behalf of not only myself but other shareholders that have been wronged in the
same way by Defendants.
5. I understand that I represent a class of all persons who bought shares
pursuant or traceable to the Registration Statement.
6. I understand that in September 2012, the Court denied Defendants
motions to dismiss. Thus, the case has moved into discovery.
7. I have communicated with counsel throughout the course of this
action.
8. I understand that a class representative is a representative party who
acts on behalf of other class members in directing the litigation. I am willing to
serve as a class representative either individually or as part of a group.
9. I understand that as a class representative, I have a fiduciary
responsibility to the absent class members to oversee the litigation and ensure that
counsel for plaintiffs prosecute the case vigorously and in the interest of all class
members equally.
10. I understand that the other proposed class representatives are Zachary
Lewy and Eric Klement.
11. I will continue to communicate with Federman & Sherwood and the
Rosen Law Firm about the status of the litigation, case strategies, settlement
negotiations, and other matters pertinent to overseeing the litigation.
12. Throughout the course of this litigation, I have independently
monitored news about SkyPeople through internet financial sites. Even prior to
my involvement in this action, I monitored SkyPeople news releases and its stock
price. I will continue to monitor independently SkyPeople developments through
news and internet sources, independent of any information that I may receive or
demand from counsel.
13. I understand that, as a class representative, my duties may include
consulting with plaintiffs counsel on proposed strategies and tactics during the
course of the litigation, making recommendations as to whether or not to accept a
particular settlement offer, and testifying at deposition and trial. I accept and will
diligently perform all such duties. I have already testified at a deposition in the
beginning of J une 2013
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

Executed this ___ day of J une, 2013

BENJAMIN PADNOS
3
28
EXHIBIT 5
Case 1:11-cv-02700-PKC Document 15-2 Filed 06/20/11 Page 2 of 9 Case 1:11-cv-02700-PKC Document 118-1 Filed 06/28/13 Page 85 of 111
Case 1:11-cv-02700-PKC Document 15-2 Filed 06/20/11 Page of 9 Case 1:11-cv-02700-PKC Document 118-1 Filed 06/28/13 Page 86 of 111
Case 1:11-cv-02700-PKC Document 15-2 Filed 06/20/11 Page of 9 Case 1:11-cv-02700-PKC Document 118-1 Filed 06/28/13 Page 87 of 111
EXHIBIT 6
ROSEN LAW FIRM BIOGRAPHY 1
THE ROSEN LAW FIRM P.A.
BIOGRAPHY
I. ATTORNEYS
LAURENCE ROSEN - MANAGING ATTORNEY
Laurence Rosen is a 1988 graduate of New York University School of Law. He earned
an M.B.A. in finance and accounting at the University of Chicago Graduate School of Business
and a B.A. in Economics from Emory University. Mr. Rosen served as a law clerk to the
Honorable Stanley S. Brotman, Senior United States District J udge for the District of New
J ersey. Mr. Rosen entered private practice as an associate at the law firm of Skadden Arps Slate
Meagher & Flom in New York City where he participated in a number of complex securities
class action and derivative litigation matters. He later served as an associate at McCarter &
English in Newark, New J ersey where he specialized in securities and business litigation.
After practicing general securities and commercial litigation in New York City with
Solton Rosen & Balakhovsky LLP, Mr. Rosen founded The Rosen Law Firm to represent
investors exclusively in securities class actions and derivative litigation. Mr. Rosen is admitted
to practice law in New York, California, Florida, New J ersey and the District of Columbia. Mr.
Rosen is also admitted to practice before numerous United States District Courts throughout the
country and the United States Court of Appeals for the Second, Fourth, and Sixth Circuits.
PHILLIP KIM ATTORNEY
Mr. Kim graduated from Villanova University School of Law in 2002. He received a
B.A. in Economics from The J ohns Hopkins University in Baltimore, Maryland in 1999. Prior to
joining The Rosen Law Firm, Mr. Kim served as Assistant Corporation Counsel for the City of
New York in the Special Federal Litigation Division. In that position, Mr. Kim defended a
number of class action lawsuits, litigated numerous individual actions, and participated in more
than seven trials. Mr. Kim focuses his practice on securities class actions and shareholder
derivative litigation. Mr. Kim is admitted to the bar of the State of New York and admitted to
practice in the United States District Courts for the Southern District of New York, the Eastern
District of New York and the District of Colorado, and the United States Court of Appeals for
the Second Circuit.
TIMOTHY W. BROWN ATTORNEY
In 2004 Mr. Brown graduated from the University of Chicago School of Law at which he
was a recipient of a merit scholarship. Mr. Brown received his B.A. in Business Economics,
magna cum laude, from Brown University in 2001. Mr. Brown specializes in securities class
actions and shareholder derivative litigation. Mr. Brown is admitted to the bar of the State of
New York and admitted to practice in the United States District Court for the Southern District
of New York. Mr. Brown was previously employed by UBS, AG.
SARA FUKS ATTORNEY
Ms. Fuks graduated from Fordham University School of Law, cum laude, in February
2005, where she was a member of Fordham Law Review. She received her B.A. in Political
Science, magna cum laude, from New York University in 2001. Ms. Fuks began her practice at
Dewey Ballantine, LLP where she focused on general commercial litigation and then went on to
prosecute numerous ERISA and securities class actions as an associate at Milberg LLP. Ms.
Fuks is admitted to the bar of the State of New York and admitted to practice in the United States
Southern and Eastern District Courts of New York.
JONATHAN HORNE- ATTORNEY
Mr. Horne is a 2009 graduate of New York University School of Law, where he received
the Lederman/Milbank Law, Economics, and Business fellowship, and holds a B.A. in
Economics & Philosophy from the University of Toronto. Mr. Horne began his practice at Kaye
Scholer Fierman Hays & Handler LLP, where he participated in two federal trials. Mr. Horne
specializes in securities litigation. He is admitted to practice in New York and numerous federal
district courts.
YU SHI ATTORNEY
Mr. Shi received his J .D. from Columbia University School of Law in 2011 and his B.A.,
cum laude, from Columbia University in 2008. Prior to joining The Rosen Law Firm, Mr. Shi
served as a Special Assistant Corporation Counsel in the New York City Law Departments
Economic Development Division, where he worked on business and commercial transactions
involving the City of New York. Mr. Shi specializes in securities litigation. He is admitted to
practice in the State of New York and the United States District Court for the Southern District
of New York.
KEVIN CHAN
Mr. Chan graduated from Brooklyn Law School in 2012. He received an A.B. in
Psychology from Harvard University in 2007. Prior to joining the Rosen Law Firm, Mr. Chan
gained substantive experience as an intern with the U.S. Securities and Exchange Commission as
part of its Summer Honors Law Program. Mr. Chans admission to practice in New York is
currently pending.
CHRISTOPHER S. HINTON OF COUNSEL
Mr. Hinton is admitted to the bars of the State of New York, the United States District
Court for the Southern District of New York, United States District Court for the Eastern District
of Wisconsin, and the United States District Court for the District of Nebraska. He received a
B.A. degree in Economics and Political Science in 1997, magna cum laude, from Marquette
University, where he was elected to Phi Beta Kappa, and received a J .D. degree, cum laude, from
University of Illinois College of Law at Champaign in 2002. His primary area of practice is
securities and ERISA class action litigation. He co-authored Foreign Investors Serving as Lead
Plaintiffs in U.S.- Based Securities Cases, International Practice Section Newsletter (Association
of Trial Lawyers of America, Washington, D.C.), Winter 2004 and Spring 2005. Mr. Hinton has
been a member of the plaintiffs bar since 2003 and has focused on class action litigation.
II. RECENT ACCOMPLISHMENTS OF THE ROSEN LAWFIRMPA
In re Textainer Financial Servs. Corp., No. CGC 05-440303. The Rosen Law Firm was
Co-Lead Counsel in this class action in the California Superior Court, San Francisco County
alleging breach of fiduciary duty in connection with the sale of the assets of six related publicly
traded limited partnerships. After winning the first phase of a multi-phase bench trial, Plaintiffs
obtained a $10 million cash settlement for class members.
Friedman v. Quest Energy Partners LP, et al., Case No. CIV-08-936-M. The Rosen Law
Firm was sole Lead Counsel on behalf of purchasers of Quest Resource Corporations securities
in this consolidated class action filed in the U.S. District Court for the Western District of
Oklahoma. The complaint alleged violations of 10b and 20(a) of the Securities Exchange Act
arising out of the Companys issuance of materially false and misleading statements in
connection with the Companys former CEO and CFO misappropriating nearly $10 million. All
classes and parties to this litigation settled this action for $10.1 million in cash.
Hufnagle v. RINO International Corporation, No. CV 10-8695-VBF (VBKx). The Rosen
Law Firm is currently serving as sole Lead Counsel in this consolidated class action pending in
the U.S. District Court for the Central District of California. The complaint alleges violations of
10b and 20(a) of the Securities Exchange Act arising out of the Companys issuance of
materially false and misleading statements of revenue and earnings. The parties agreed to a
partial settlement for $7 million in cash. The case is ongoing against RINOs auditor.
In re Natures Sunshine Products, Inc. Securities Litigation, Case No. 2:06-cv-00267-TS-
SA. The Rosen Law Firm was sole Lead Class Counsel in this class action in the U.S. District
Court for the District of Utah. The complaint alleged violations of 10b and 20(a) of the
Securities Exchange Act arising out of the Companys materially false and misleading statements
concerning its financial statements and business practices. Following the certification of the
class and extensive discovery, Plaintiffs agreed to settle this case for $6 million in cash.
Bensley v. FalconStor Software, Inc., No. 10-CV-4672 (ERK) (CLP). The Rosen Law
Firm is currently serving as sole Lead Counsel in this consolidated class action pending in the
U.S. District Court for the Eastern District of New York. The complaint alleges violations of
materially false and misleading statements about the Companys true financial and business
condition. The parties have preliminarily agreed to settle this action for $5 million in cash,
subject to Court approval.
In re Entropin, Inc. Securities Litigation, Case No. CV 04-6180-RC. The Rosen Law
Firm was counsel to Plaintiff in this securities class action in the United States District Court for
the Central District of California, and Lead Counsel in the related class action brought in
California state court against Entropin, Inc., a defunct pharmaceutical company. These actions
alleged violations of 10b and 20(a) of the Securities Exchange Act and violations various
state securities laws arising out of allegedly false and misleading statements about the
Companys lead drug candidate Esterom, respectively. On the eve of trial, Defendants agreed to
settle these cases for a $4.5 million cash payment to class members.
Stanger v. China Electric Motor, Inc., Case no. CV 11-2794-R (AGRx). The Rosen Law
Firm is currently serving as sole Lead Counsel in this class action pending in the U.S. District
Court for the Central District of California. The complaint alleges violations of 11, 12(a)(2),
and 15 of the Securities Act of 1933 in connection with the Companys $22.5 million initial
public offering. The parties have preliminarily agreed to settle this action for $3,778,333.33 in
cash, subject to Court approval.
In re StockerYale, Inc. Securities Litigation, Case No. 1:05-cv-00177. The Rosen Law
Firm served as sole Lead Counsel in this consolidated class action in the U.S. District Court for
the District of New Hampshire. The complaint alleged violations of 10b, 20(a) and 20A of
the Securities Exchange Act arising out of the issuance of allegedly false and misleading press
releases regarding certain contracts the Company claimed to have signed. Plaintiffs settled this
class action for $3.4 million cash payment to class members.
Mallozzi v. Industrial Enterprises of America, Inc., Case No. 07-CV-10321 (GBD). The
Rosen Law Firm was Co-Lead Counsel in this class action in the U.S. District Court for the
Southern District of New York. The complaint alleged violations of 10b and 20(a) of the
Securities Exchange Act arising out of the Companys issuance of materially false and
misleading statements of revenues and earnings. During the pendency of the Companys
bankruptcy, the parties settled this class action for $3.4 million in cash.
Meruelo Capital Partners 2, LLC et al. v. Wedbush Morgan Securities, Inc., Case no. BC
352498. The Rosen Law Firm was co-counsel to plaintiffs in this action brought in California
Superior Court, Los Angeles County for violations of the California State securities laws against
the securities issuer and broker-dealer in connection with the sale of $2.5 million worth of
securities. On the eve of trial, plaintiffs settled the claims against the issuer for a cash payment
of $1 million. Following an eight day jury trial, Plaintiffs obtained a jury verdict in their favor
and against the underwriter for over $2.2 million (which included prejudgment interest). In sum,
plaintiffs recovered over $3.2 million, which represented 100% of plaintiffs principal
investment of $2.5 million and over $700,000 in prejudgment interest. The verdict was affirmed
by the California 2
nd
District Court of Appeal.
Ray v. TierOne Corporation, Case No. 10CV199. The Rosen Law Firm was sole Lead
Counsel in this class action brought in the U.S. District Court for the District of Nebraska. The
complaint alleged violations of 10b and 20(a) of the Securities Exchange Act arising out of the
Companys issuance of materially false and misleading statements of earnings and the
Companys banking operations and business. The parties settled this action for $3.1 million in
cash.
In re Skilled Healthcare Group, Inc. Securities Litigation, Case No. 2:09-CV-5416-DOC
(RZx). The Rosen Law Firm was Co-Lead Counsel in this class action in the U.S. District Court
for the Central District of California. The complaint alleged violations of the 11, 12(a)(2),
and 15 of the Securities Act of 1933 and 10b and 20(a) of the Securities Exchange Act arising
out of the Companys issuance of materially false and misleading statements of revenue and
earnings. Plaintiffs settled this action for $3 million in cash.
Madden v. Pegasus Communications Corp, Case No. 2:05-cv-0568. The Rosen Law
Firm was sole Lead Counsel in this class action in the U.S. District Court for the Eastern District
of Pennsylvania. The action alleged violations of 10b and 20(a) of the Securities Exchange
Act arising out of the issuance of allegedly false and misleading statements concerning the
Companys direct broadcast satellite agreement with DirecTV and the Companys reported
subscriber growth and totals. Plaintiffs settled this action for a $2.95 million cash payment to
class members.
In re TVIA, Inc. Securities Litigation, Case No. C-06-06403-RMW. The Rosen Law
Firm was sole Lead Counsel in this consolidated class action in the U.S. District Court for the
Northern District of California. The complaint alleged violations of 10b, 20(a), 20A of the
Securities Exchange Act arising out of the Companys issuance of materially false and
misleading financial statements by virtue of the Company improper recognition of revenues in
violation of GAAP. Plaintiffs settled this action for a $2.85 million cash payment to class
members.
Zagami v. Natural Health Trends Corp., et al., Case No. 3:06-CV-1654-D. The Rosen
Law Firm served as sole Lead Counsel in this class action in the U.S. District Court for the
Northern District of Texas. The complaint alleged violations of 10b and 20(a) of the Securities
Exchange Act arising out of the Companys issuance of materially false and misleading financial
statements in violation of GAAP. Plaintiffs settled this case for $2.75 million cash payment to
class members.
In re Robert T. Harvey Securities Litigation, Case No. SA CV-04-0876 DOC (PJ Wx).
The Rosen Law Firm served as Co-Lead Counsel in this class action in the U.S. District Court
for the Central District of California and the related California state court class actions. This
action alleged violations of 10b and 20(a) of the Securities Exchange Act arising out of the
sale of partnership interests that corresponded to the securities of Chaparral Network Storage and
AirPrime, Inc., n/.k/a Sierra Wireless, Inc. Plaintiffs settled this and the related state court
actions for an aggregate $2.485 million cash payment to class members.
In re China Education Alliance, Inc. Securities Litigation, No. C 10-9239-CAS (J Cx).
The Rosen Law Firm is currently serving as sole Lead Counsel in this consolidated class action
pending in the U.S. District Court for the Central District of California. The complaint alleges
violations of 10b and 20(a) of the Exchange Act arising out of the Companys issuance of
materially false and misleading statements of revenue and earnings. The parties settled this
action for $2.425 million in cash.
In re Fuwei Films Securities Litigation, Case no. 07-CV-9416 (RJ S). The Rosen Law
Firm was sole Lead Counsel in this consolidated class action in the U.S. District Court for the
Southern District of New York. The complaint alleged violations of 11, 12(a)(2), and 15 of
the Securities Act of 1933 in connection with material misrepresentations in the Companys
Registration Statement and Prospectus in connection with the Companys $35 million IPO. The
parties settled this action for $2.15 million cash payment to class members.
Rose v. Deer Consumer Products, Inc., Case No. CV11-3701 DMG (MRWx). The
Rosen Law Firm is currently serving as sole Lead Counsel in this class action pending in the
U.S. District Court of the Central District of California. The complaint alleges violations of
10b and 20(a) of the Securities Exchange Act arising the issuance of false statements
concerning the Companys true financial condition. The parties agreed to a partial settlement for
$2.125 million in cash. The case is ongoing against Deers auditor.
Henning v. Orient Paper, Inc., No. CV 10-5887-VBF (AJ Wx). The Rosen Law Firm is
currently serving as sole Lead Counsel in this class action pending in the U.S. District Court for
the Central District of California. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act and certain violations of the Securities Act arising out of the
Companys issuance of materially false and misleading statements about the Companys true
financial condition and business prospects. The parties settled this action for $2 million in cash.
Burritt v. Nutracea, Inc., Case No.CV-09-00406-PHX-FJ M. The Rosen Law Firm was
sole Lead Counsel in this consolidated class action in the U.S. District Court for the District of
Arizona. This action alleged violations of 10b and 20(a) of the Securities Exchange Act of
1934 and the Arizona securities laws in connection with the Companys issuance of materially
false and misleading statements of earnings and revenues. During the pendency of the
Companys bankruptcy, Plaintiffs settled this action for $1.5 million in cash and a remainder
interest of 50% of the issuers directors and officers liability insurance policy.
Press v. Delstaff LLC, No. MSC 09-01051. The Rosen Law Firm was sole Lead Counsel
in this class action in the California Superior Court for Contra Costa County, brought in
connection with a going private transaction valued at $1.25/share for the 6.4 million shares
implicated in the transaction. The parties settled this action for $1,642,500 in additional
compensation to shareholders.
In re Northfield Laboratories, Inc. Securities Litigation, Case No. 06 C 1493. The Rosen
Law Firm was sole Lead Counsel in this consolidated class action in the U.S. District Court for
the Northern District of Illinois. The complaint alleged violations of 10b and 20(a) of the
Securities Exchange Act arising out of the Companys materially false and misleading statements
concerning its PolyHeme blood substitute product and business prospects. Following extensive
class discovery and litigation activity in bankruptcy court, the parties agreed to settle this action
for $1.5 million in cash.
In re PartsBase.com, Inc. Securities Litigation, Case No. 01-8319. The Rosen Law Firm
was Co-Lead Counsel in this class action in the U.S. District Court for the Southern District of
Florida. The action arose from a $45.5 million initial public offering of common stock by the
defendant issuer and a syndicate of underwriters including Roth Capital Partners and PMG
Capital Corp. Plaintiffs settled this action for $1.5 million cash settlement for class members.
In re Empyrean Bioscience Securities Litigation, Case No. 1:02CV1439. This class
action in which the Rosen Law Firm was sole Lead Counsel was filed in the U.S. District Court
for the Northern District of Ohio. The action alleged violations of 10b and 20(a) of the
Securities Exchange Act based on misrepresentations in defendants SEC filings and press
releases concerning the clinical testing of the Companys GEDA Plus microbicide gel. After the
court denied defendants motion to dismiss the complaint, the parties briefed the issue of whether
the securities were traded in an efficient market. Prior to a decision on market efficiency,
Plaintiffs settled the case for a $1.4 million payment to class members.
In re Himax Technologies, Inc. Securities Litigation, Case No. C 07-4891-DDP. The
Rosen Law Firm served as Co-Lead Counsel in this consolidated class action in the U.S. District
Court for the Central District of California, Western Division. The complaint alleged violations
of 11 and 15 of the Securities Act arising out of the Companys IPO. Plaintiffs agreed to
settle this case for $1.2 million cash payment to class members.
In re Flight Safety Technologies, Inc. Securities Litigation, Case No. 3:04-cv-1175. The
Rosen Law Firm was sole Lead Counsel in this consolidated class action in the U.S. District
Court for the District of Connecticut. The action alleged violations of 10b and 20(a) of the
Securities Exchange Act arising out of the defendants alleged failure to disclose material adverse
information concerning the Companys products under development and misrepresenting the
amount of time it would take to commercialize the products. Plaintiffs settled the case for a $1.2
million cash payment to class members.
In re: M.H. Meyerson & Co. Securities Litigation, Case No. 02-CV-2724. This class
action, in which the Rosen Law Firm was sole Lead Counsel, was filed in U.S. District Court for
District of New J ersey. The complaint alleged violations of 10b and 20(a) of the Securities
Exchange Act based on allegedly false and misleading SEC filings related to the planned launch
of an online brokerage business, and other material misrepresentations, which allegedly inflated
the price of Meyerson stock during the class period. Plaintiffs settled the case for a $1.2 million
payment to class members.
In re OPUS360 Corp. Securities Litigation, Case No. 01-Civ-2938. The Rosen Law Firm
was Co-Lead Counsel for this action brought in the Southern District of New York alleging
violations of the federal securities laws arising from a $75.0 million initial public offering of
common stock by the defendant issuer and a syndicate of underwriters including J P Morgan and
Robertson Stephens, Inc. The Court certified the action as a class action and approved a final
settlement.
Ansell v. National Lampoon, Inc., Case No. CV10-9292-PA (AGRx). The Rosen Law
Firm was sole Lead Counsel in this class action in the U.S. District Court for the Central District
of California. The complaint alleged violations of 10b and 20(a) of the Securities Exchange
Act arising out of a market manipulation scheme involving National Lampoons common stock.
The parties agreed to settle this action for $1 million in cash.
Fouladian v. Busybox.com, Inc., Case No. BC 248048. The Rosen Law Firm was Co-
Lead Counsel in this class action brought in California Superior Court, Los Angeles County.
The action arose from a $12.8 million initial public offering of securities by the defendant issuer
and underwriter. California and federal securities laws claims (Cal. Corp. Code 25401 and 11
of 1933 Act) were brought on behalf of a nationwide class of public offering investors. The
Court approved a $1.0 million cash settlement to a nationwide class of investors.
Gianoukas v. Tullio and Riiska, Case No. 02CC18223. The Rosen Law Firm was lead
counsel to a group of twenty-one plaintiffs that brought claims of fraud and negligent
misrepresentation in California Superior Court, Orange County against the former Chief
Executive and Chief Financial Officers of a publicly traded software company, NQL Inc. The
complaint alleged that the officers issued a series of false and misleading press releases
concerning the business of NQL for the purpose of inducing the purchase and retention of NQL
securities. Plaintiffs settled the action favorably for a confidential amount.
The BoxLot Company v. InfoSpace, Inc., Case No. GIC 779231. The Rosen Law Firm
was plaintiffs counsel for this action filed in California Superior Court, San Diego County
which arose from the aborted merger agreement and ultimate sale of The BoxLot Companys
assets to InfoSpace. The action alleged violations of California securities laws (Cal. Corp. Code
25400 & 25401) and common laws and sought damages of $92.8 million from InfoSpace and
its CEO, Naveen J ain. The case settled favorably for plaintiffs for a confidential amount.
Teague v. Alternate Energy Holdings, Inc., No. 10-CV-634-BLW. The Rosen Law Firm
was sole Lead Counsel in this class action pending in the U.S. District Court for the District of
Idaho. The complaint alleged violations of 10b and 20(a) of the Securities Exchange Act
arising out of the Companys issuance of materially false and misleading financial statements
and business condition. The parties settled this action for $450,000.
Huttenstine v. Mast, Case No. 4:05-cv-152 F(3). The Rosen Law Firm is currently
serving as sole Lead Counsel in this class action pending in the U.S. District Court for the
Eastern District of North Carolina. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act arising out of the Companys material misstatements and omissions
concerning the nature of certain sales contracts it had entered into. Plaintiffs have preliminarily
agreed to settle this action this action for $425,000 cash payment to class members.
Kinzinger v. Paradigm Medical Industries, Inc., Case No. 03-0922608. The Rosen Law
Firm served as sole Lead Counsel in this class action filed in Utah state court alleged violations
of the Utah Securities Act against Paradigm Medical arising out of false and misleading
statements made to investors in a $5.0 million private placement of securities. The court
approved a $625,000 settlement on behalf of the private placement purchasers.
III. SECURITIES CLASS ACTIONS IN WHICH THE ROSEN LAWFIRM P.A. IS
CURRENTLY LEAD COUNSEL
Munoz v. China Expert Technology, Inc., Case No. 07-CV-10531 (AKH). The Rosen
Law Firm is currently serving as sole Lead Counsel in this class action pending in the U.S.
District Court for the Southern District of New York. The complaint alleges violations of 10b
and 20(a) of the Securities Exchange Act arising out of: (a) the Companys issuance of
materially false statements of revenues and earnings; and (b) the Companys auditors issuance
of materially false and misleading clean audit opinions. The class has been certified and the
action is in discovery.
Nguyen v. Radient Pharmaceuticals Corporation, Case No. CV11-0405-DOC (MLGx).
The Rosen Law Firm is currently serving as sole Lead Counsel in this class action pending in the
U.S. District Court of the Central District of California. The complaint alleges violations of
10b and 20(a) of the Securities Exchange Act arising out of the issuance of false statements
concerning the Companys clinical trial involving its principal product. The class has been
certified and discovery is closed. Trial is to commence in November 2013.
Katz v. China Century Dragon Media, Inc., Case no. CV 11-02769 J AK (SSx). The
Rosen Law Firm is currently serving as sole Lead Counsel in this class action pending in the
U.S. District Court for the Central District of California. The complaint alleges violations of
11, 12(a)(2), and 15 of the Securities Act of 1933 and 10b and 20(a) of the Securities
Exchange Act arising out the Companys issuance of materially false and misleading financial
statements. The class has been certified and the action is in discovery.
Snellink v. Gulf Resources, Inc., No.CV11-3722-ODW (MRWx). The Rosen Law Firm
is currently serving as co-Lead Counsel in this class action pending in the U.S. District Court for
the Central District of California. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act arising out the Companys failure to disclose the related party nature of
certain transactions, and the Companys issuance of false financial statements. This action is in
discovery.
Zhu v. UCBH Holdings, Inc., No. C 09-4208-J SW. The Rosen Law Firm is currently
serving as sole Lead Counsel in this consolidated class action pending in the U.S. District Court
for the Northern District of California. The complaint alleges violations of 10b and 20(a) of
the Securities Exchange Act arising out of the Companys issuance of materially false and
misleading statements of revenue and earnings, and the Companys banking operations and
business. This action is in discovery.
In re China Intelligent Lighting and Electronics, Inc. Securities Litigation, No. 2:11-CV-
02768 PSG (SSx). The Rosen Law Firm is currently serving as co-Lead Counsel in this
consolidated class action pending in the U.S. District Court for the Central District of California.
The complaint alleges violations of 11, 12(a)(2), and 15 of the Securities Act of 1933 and
10b and 20(a) of the Securities Exchange Act arising out the Companys issuance of
materially false and misleading financial statements. This action is in discovery.
Cheung v. Keyuan Petrochemicals, Inc., No. CV 11-9495-PSG (J CGx). The Rosen Law
firm is currently serving as sole Lead Counsel in this class action pending in the U.S. District
Court for the Central District of California. The complaint alleges violations of 10b and 20(a)
of the Securities Exchange Act of 1934 in connection with the Companys failure to disclose
material related party transactions in periodic reports it filed with the SEC. This action is in
discovery.
In re Puda Coal Securities Litigation, No. 11-CV-2598 (BSJ )(HBP). The Rosen Law
Firm is currently serving as co-Lead Counsel in this consolidated class action pending in the U.S.
District Court for the Southern District of New York. The complaint alleges violations of the
Exchange Act and Securities Act arising out the Companys issuance of materially false and
misleading financial statements. This action is in discovery.
Kubala v. SkyPeople Fruit J uice, No. 11-CV-2700 (PKC). The Rosen Law Firm is
currently serving as sole Lead Counsel in this consolidated class action pending in the U.S.
District Court for the Southern District of New York. The complaint alleges violations of 10b
and 20(a) of the Securities Exchange Act out of the Companys failure to disclose material
related party transactions that rendered the Companys financial statements false. This action is
in discovery.
Guimetla v. Ambow Education Holding Ltd., No. CV-12-5062-PSG(AJ Wx). The Rosen
Law Firm is currently serving as sole Lead Counsel in this class action pending in the U.S.
District Court of the Central District of California. The complaint alleges violations of the
Securities Exchange Act of 1934 in connection with the Companys issuance of materially false
and misleading financial statement. This action is at pleading stage.
Campton v. Ignite Restaurant Group, Inc., No. 12-CV-2196. The Rosen Law Firm is
the Southern District of Texas. The complaint alleges violations of the Securities Act of 1933 in
connection with material misrepresentations in the Companys Registration Statement and
Prospectus issued for the companys IPO. This action is at the pleading stage.
Leshinsky v. SmartHeat, Inc., No. 12-CV-6682 (PAE). The Rosen Law Firm is currently
serving as sole Lead Counsel in this class action pending in the U.S. District Court of the
Southern District of New York. The complaint alleges violation of 10b and 20(a) of the
Securities Exchange Act out of the Companys failure to disclose insider stock sales. This action
is at the pleading stage.
Snellink v. Universal Travel Group, Inc., Case No.11-CV-2164 (SDW). The Rosen Law
Firm is currently serving as sole Lead Counsel in this class action pending in the U.S. District
Court for the District of New J ersey. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act arising the issuance of false statements concerning the Companys true
financial condition. This action is at the pleading stage.
Vandevelde v. China Natural Gas, Inc., Case no. 10-728-SLR. The Rosen Law Firm is
currently serving as sole Lead Counsel in the class action pending in the U.S. District Court for
the District of Delaware. The complaint alleges violations of 10b and 20(a) of the Securities
Exchange Act arising out of the issuance of materially false and misleading financial statements.
This action is at the pleading stage.
In re L&L Energy, Inc. Securities Litigation, No. C11-1423-RSL. The Rosen Law Firm
is currently serving as sole Counsel in this class action pending in the U.S. District Court for the
Western District of Washington. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act arising out the Companys issuance of false financial statements. This
action is at the pleading stage.
Yang v. Tibet Pharmaceuticals, Inc., No. 12-54-WAL-GWC. The Rosen Law Firm is
currently serving as sole Lead Counsel in this consolidated class action pending in the U.S.
District Court of the Virgin Islands, St. Croix Division. The complaint alleges violations of the
Securities Act of 1933 in connection with material misrepresentations in the Companys
Registration Statement and Prospectus issued for the Companys public offering of common
stock. The action is at the pleading stage.
Luo v. Qiao Xing Universal Resources, Inc., No. 12-45-WAL-GWC. The Rosen Law
Firm is currently serving as sole Lead Counsel in this consolidated class action pending in the
U.S. District Court of the Virgin Islands, St. Croix Division. The complaint alleges violations of
the Exchange Act in connection with the Companys issuance of materially false and misleading
financial statements. The action is at the pleading stage.
Howard v. Chanticleer Holdings, Inc.., No. 12-CV-81123-J IC. The Rosen Law Firm is
the Southern District of Florida. The complaint alleges violations of the Securities Act of 1933
in connection with material misrepresentations in the Companys Registration Statement and
Prospectus issued for the Companys public offering of common stock and warrants. The action
is at the pleading stage.
Cole v. Duoyuan Printing, Inc., Case No. 10-CV-7325(GBD). The Rosen Law Firm is
currently serving a Co-Lead Counsel in this class action pending in the U.S. District Court for
the Southern District of New York. The complaint alleges violations of 11, 12(a)(2), and 15
of the Securities Act of 1933 and 10b and 20(a) of the Securities Exchange Act arising out of
the Companys issuance of materially false and misleading statements about the Companys true
financial condition and adequacy of the Companys internal controls. This action is at the
pleading stage.
Blitz v. AgFeed Industries, No. 3:11-0992. The Rosen Law Firm is currently serving as
co-Lead Counsel in this consolidated class action pending in the U.S. District Court for the
Middle District of Tennessee. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act arising out the Companys issuance of materially false and misleading
financial statements. This action is at the pleading stage.
Valentino v. KPMG LLP, No. 8:13CV22. The Rosen Law Firm is currently serving as
sole Lead Counsel in this class action pending in the U.S. District Court for the District of
Nebraska. The complaint alleges violations of 10b and 20(a) of the Securities Exchange Act
against TierOne Corporations former independent auditor, KPMG. This action is at the
pleading stage.
Masterson v. Commonwealth Bankshares, No. 13-62-MSD-DEM. The Rosen Law Firm
is currently serving as sole Lead Counsel in this class action pending the U.S. District Court for
the Eastern District of Virginia. The complaint alleges violations of 10b and 20(a) of the
Securities Exchange Act arising out the Banks issuance of materially false and misleading
statements about its loan portfolio. This action is at the pleading stage.
In re ChinaCast Education Corporation Sec. Litig., No. CV 12-4621- J FW (PLAx). The
Rosen Law Firm is currently serving as co-Lead Counsel in this consolidated class action
currently on appeal with the U.S. Court of Appeals or the Ninth Circuit. The complaint alleges
violations of 10b and 20(a) of the Securities Exchange Act arising out the Company
overstating it assets and cash balances and misstating the Companys internal controls.
Petrie v. Electronic Game Card, Inc., No. SACV 10-0252-DOC (RNBx). The Rosen
Law Firm is currently serving as sole Lead Counsel in this consolidated class action currently on
appeal with the U.S. Court of Appeals for the Ninth Circuit. The complaint alleges violations of
materially false and misleading financial statements in violation of Generally Accepted
Accounting Principles and the Companys publicly stated internal policies.
Wolfe v. AspenBio Pharma, Inc., No. 11 CV 165-REB-KMT. The Rosen Law Firm is
currently serving as sole Lead Counsel in this class action currently on appeal with the U.S.
Court of Appeals for the Tenth Circuit. The complaint alleges violations 10b and 20(a) of the
Securities Exchange Act arising out the Companys misstatements and omissions concerning the
effectiveness of its main product AppyScore.

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Case 1:11-cv-02700-PKC Document 118-1 Filed 06/28/13 Page 1 of 111

management determined that the failure to disclose the relevant affiliation

Material weakness in internal control. The company disclosed in its 10-

Valuation discount reflects a dampened growth outlook and internal

1. SkyPeoples Chinese SAIC financials indicate the Company is less

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