Glancy Binkow & Goldberg LLP Announces Significant Victory by Investors in Lawsuit against Puda Coal, Inc.

Glancy Binkow & Goldberg LLP announces a significant victory by investors of Puda Coal, Inc. (“Puda” or the “Company”) (Nasdaq: PUDA), in the securities class action entitled In re Puda Coal Securities Inc. et al. Litigation, Case No. 11-CV-2598, pending in United States District Court for the Southern District of New York.

On March 15, 2013, U.S. District Court Judge Katherine B. Forrest issued an order that resolved six motions to dismiss the operative complaint filed by accounting firms MSPC Certified Public Accountants and Advisors, P.C. (“MSPC”), Moore Stephens Hong Kong (“MSHK”) and Moore Stephens International Ltd., by underwriters Macquarie Capital (USA) and Brean Murray, Carret & Co., and by two Puda directors, C. Mark Tang and Lawrence Wizel. The Court denied MSPC’s and MSHK’s motions in their entirety, finding that plaintiffs stated valid claims against Puda’s auditors for violations of Section 10(b) of the 1934 Exchange Act and for violations of Section 11 of the 1933 Securities Act (“1933 Act”). The Court also denied in their entirety the underwriters’ motions to dismiss, finding that plaintiffs stated claims against both for violations of Sections 11 and 12(a)(2) of the 1933 Act. Finally, the Court held that plaintiffs had stated valid claims against directors C. Mark Tang and Lawrence Wizel for violations of Section 11 and 15 of the 1933 Act.

These rulings constitute a significant victory for Puda’s shareholders. The defendants whose motions were denied in full or in part must answer the complaint and provide both written evidence and testimony to plaintiffs.

The action was originally filed in April 2011 and seeks to recover losses suffered by all persons or entities who purchased Puda common stock and call options, or sold Puda put options between November 13, 2009 and October 3, 2011 (the “Class Period”), and also on behalf of purchasers of Puda shares pursuant and/or traceable to the Company’s December 8, 2010 public offering of its common stock.

Puda purports to supply metallurgical coking coal to the industrial sector in the People’s Republic of China through the Company’s indirect equity ownership in Shanxi Puda Coal Group Co., Ltd. (“Shanxi Coal”) – a PRC-based coal mining company and Puda’s sole revenue source. The Complaint alleges that Puda’s Chairman, Ming Zhao (“Zhao”) looted the Company by secretly transferring Puda’s controlling interest in Shanxi Coal to Zhao, through a series of transactions which the Company failed to disclose in its periodic financial reports. Specifically, the Complaint alleges that, in September 2009, Zhao secretly arranged for his brother to improperly authorize and cause the transfer of Puda’s 90% interest in Shanxi Coal to Zhao. As a result of this transfer, Puda lost its entire ownership interest in Shanxi Coal.

Zhao transferred 49% of the shares of Shanxi Coal that he controlled to CITIC Trust Co. (“CITIC”), the largest Chinese private equity fund and merchant bank, which is owned and controlled by the Chinese government, in exchange for 100% of the ordinary shares in the CITIC Juxinhuijin Trust Fund I (“CITIC Trust”), valued by CITIC at RMB 1.212 billion ($179 million). Just days later, Zhao pledged the other 51% of Shanxi Coal to CITIC as security to obtain a RMB 2.5 billion ($369 million) 3-year loan to Shanxi Coal at a cost of 14.5% (annual interest plus fees). In November 2010, the loan was subsequently increased to RMB 3.5 billion ($517 million) and in January 2011, the loan was further increased to RMB 5 billion ($738.55 million).

The Complaint alleges that defendants did not disclose any of these transactions to investors, and further alleges that in 2010 Puda conducted two public offerings – purportedly to raise capital for Shanxi Coal – without disclosing that Puda no longer had any ownership stake in Shanxi Coal. At the same time CITIC Trust was selling interests in Shanxi Coal to Chinese investors, the defendants were misrepresenting to U.S. investors that Puda still owned a 90% stake in Shanxi Coal. Puda raised more than $100 million from investors by selling shares in an empty shell company, netting roughly $14.5 million from the sale of 2.9 million shares of Puda stock in a February 2010 offering, and another $108 million from the sale of 9 million shares in a December 2010 secondary offering of common stock. The December 2010 secondary offering was underwritten by Macquarie Capital (USA) Inc. and Brean Murray, Carret & Co., LLC.

If you purchased Puda securities, such as common stock or call options, or sold Puda put options between November 13, 2009 and October 3, 2011, or you purchased Puda shares pursuant and/or traceable to Puda’s December 8, 2010 public offering, if you have information pertinent to or would like to learn more about these claims, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Lionel Glancy, Esquire, of Glancy Binkow & Goldberg LLP, 1925 Century Park East, Suite 2100, Los Angeles, California 90067, by telephone at (310) 201-9150, Toll Free at (888) 773-9224, by e-mail to shareholders@glancylaw.com, or visit our website at http://www.glancylaw.com.