2011 apr - katz v china century dragon complaint

8/6/2019 2011 Apr - Katz v China Century Dragon Complaint

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his attorneys, which included, among other things, a review of the Defendant's

personal knowledge as to himself and his own acts, and information and belief as to

Plaintiff Dan Katz, individually and on behalf of all other persons similarly

CASE No.:

JURY TRIAL DEMANDED

V11 -?769 ~ \ t ' J L,COMPLAINCLASS ACTION

all other matters, based upon, inter alia, the investigation conducted by and through

Dragon Media, Inc. ("CDM", or the "Company"), alleges the following based upon

Laurence M. Rosen, Esq. (SBN 219683)THE ROSEN LAW FIRM, P.A.333 South Grand Avenue, 25 th FloorLos Angeles, CA 90071Telephone: (213) 785-2610Facsimile: (213) 226-4684Email: [email protected]

Defendants.

vs.

UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNlA

Plaintiff,

situated, by his undersigned attorneys, for his complaint against China Century

DAN KATZ, INDIVIDUALLY AND ONBEHALFOFALLOTHERSSThflLARLYSITUATED,

CHINA CENTURY DRAGONMEDV\.,INC., HAIMING FU, DAPENG DUAN,HUHUA LI, ZHIFENG YAN, DAVID DECAMPO, YUE LV, FANG YUAN.\VESTPARK CAPITAL, INC., JOSEPHGUNNAR & CO, LLC, I-BANKERSSECURITIES. ll\JC.. AND AEGISCAPITAL CORPORATION,

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Class Action Complaim for Violation of the Federal Securities Laws


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public documents, conference calls and announcements made by the Defendants,United States Securities and Exchange Commission ("SEC") filings, wire and pressreleases published by and regarding the Company, securities analysts' reports andadvisories about the Company, and information readily obtainable on the Internet.Plaintiff believes that substantial evidentiary support will exist for the allegationsset forth herein after a reasonable opportunity for discovery.

SUBSTANTIVE ALLEGATIONS

1. This is a securities class action on behalf of all persons or entities who:(1) purchased or otherwise acquired the securities of CDM pursuant and/ortraceable to the Company's Registration and Statement and Prospectus(collectively, the "Registration Statement") issued in connection with theCompany's February 8, 2011 initial public offering (the "IPO" or the "Offering")seeking to pursue remedies under the Sections 11, 12(a)(2), and 15 of Securities Actof 1933 (the "Securities Act"); and (2) purchased or otherwise acquired thesecurities of CDM during the period from February 8, 2011 to March 25,2011,inclusive (the "Class Period"), seeking to pursue remedies under Sections 1O(b) and20(a) of the Securities Exchange Act of 1934 (the "Exchange Act").

On February 4, 2011 the Company filed with the SEC an amendedRegistration Statement on Form S-l/A in connection with the Offering. TheRegistration Statement also contained a Prospectus and both documents containedthe Company's fmancial results for the fiscals years ended December 31, 2007,

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2008, and 2009, interim quarterly reports thereof, and results for the first threequarters ended in fiscal year 2010.3

4 ,..,..:1. The Registration Statement was declared effective on February 7,5 2011, and the Company filed the final prospectus with the SEC on February 8,678

2011.4. On February 8, 2011, the Company commenced the offering of 1.2

9 million shares of common stock priced at $5.25 per share for total gross proceedsof10 $6.3 million.1112 5. Defendants WestPark Capital ("WestPark"), Joseph Gunnar & Co.,1314151617181920

LLC ("Gunnar"), I-Bankers Securities, Inc. ("I-Bankers"), and Aegis CapitalCorporation ("Aegis") were underwriters of the Offering. ("WestPark, Gunnar, 1-Bankers, and Aegis collectively the "Underwriters"). WestPark, Gunnar and 1-Bankers were the co-managers of the Offering. The Underwriters had a 45-dayoption to purchase an additional 180,000 shares of common stock from theCompany to cover over-allotments.

21 6. Throughout the Class Period, the Defendants made false and/or22

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misleading statements, and failed to disclose material adverse facts about theCompany's business, operations, prospects and performance. Specifically, duringthe Class Period, Defendants made false and/or misleading statements and/or failedto disclose that the financial statements included in the Registration Statement asof

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December 31, 2009 and 2008 were materially false and misleading and coul d not berelied upon as they contained material errors

JURISDICTION AND VENUE5 7. The claims asserted herein arise under and pursuant to Sections 10(b)6789

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and 20(a) of the Exchange Act, (15 U.S.c. 78j(b) and 78t(a)), and Rule 10b-5promulgated thereunder (17 C.F.R. 240.10b-5). Additional claims arise underSections 11, 12(a)(2) and 15 of the Securities Act, 15 U.S.c. 77k and 770.

8. This Court has jurisdiction over the subject matter of this actionpursuant to 27 of the Exchange Act (15 U.S.C. 78aa) and 28 U.S.c. 1331 andSection 220fthe Securities Act, 15 U.S.C. 77v.

Securities Act, 15U.S.c. 77v.Exchange Act, 15 U.S.c. 78aa, 28 U.S.c. 1391(b), and Section 22 of the

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9. Venue is proper in this Judicial District pursuant to 27 of the

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10. In connection with the acts, conduct and other wrongs alleged in thisComplaint, the Defendants, directly or indirectly, used the means andinstrumentalities of interstate commerce, including but not limited to, the UnitedStates mails, interstate telephone communications and the facilities of the AMEX.

PARTIES11. Plaintiff Dan Katz, as set forth in the attached PSLRA certification,

purchased CDM securities at artificially inflated prices during the Class Period andhas been damaged thereby.



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12. Defendant CDM is a Delaware Corporation with its principalexecutive officers in Guangdong Province, China. CDM purports to be a television

4 advertising Company in China.5 13. Defendant HaiMing Fu ("Fu") was at all relevant times CDM's Chief6 Executive Officer; and signed the Company's Registration Statement in connection78 with the Offering.910

14. Defendant Dapeng Duan ("Duan") was at all relevant times CDM'sChief Financial Officer; and signed the Company's Registration Statement in

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15. Defendant HuiHua Li ("Li") was at all relevant times CDM'sChairman of the Board; and signed the Company's Registration Statement inconnection with the Offering.

16. Defendant Zhifeng Yan ("Yan") was at all relevant times a CDMDirector; and signed the Company's Registration Statement in connection with theOffering.

17. Defendant David De Campo ("De Campo") was a CDM Director; andsigned the Company's Registration Statement in connection with the Offering. Heinexplicably resigned from the Company on March 15, 2011.

18. Defendant Yue Lu ("Lu") was at all relevant times a CDM Director;and signed the Company's Registration Statement in connection with the Offering.



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19. Defendant Fang Yuan ("Yuan") was at all relevant times a CDM2 Director; signed the Company' s Registration Statement in connection with the,..,.J4 Offering.5 20. Defendants Fu, Duan, Li, Yan, De Campo, Lu, and Yuan are6 collectively the "Individual Defendants".78 21. Defendant WestPark Capital ("WestPark"), Inc. is a full service9 investment banking company. WestPark's headquarters are located at 1900 Avenue

of the Stars, Suite 310, Los Angeles, CA 90067. WestPark was an underwriter of101112 the Offering.13 22. Defendant Joseph Gunnar & Co., LLC ("Gunnar") is a full service

broker dealer. Gunnar is headquartered in New York, New York. Gunnar was an141516 underwriter of the Offering.

investment banking company.171819

')"',~ . Defendant I-Bankers Securities, Inc. ("I-Bankers") is a full serviceI-Bankers' headquarters are located at 6303

20 Owensmouth Ave, loth Floor, Woodland Hills, CA 91367. I-Bankers was an21 underwriter of the Offering.2223 24. Defendant Aegis Capital Corporation ("Aegis") IS a private equity24 firm. Aegis was an underwriter of the Offering.25 PLAINTIFF'S CLASS ACTION ALLEGATIONS26 25. Plaintiff brings this action as a class action pursuant to Federal Rules2728 of Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those



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who: (1) purchased or otherwise acquired the securities of CDM pursuant and/or2 traceable to the Company's Registration Statement issued in connection with the4 with the Company's February 8, 2011 IPQ; and (2) purchased or otherwise5 acquired the securities of CDM during the Class Period. Excluded from the Class

any entity in which Defendants have or had a controlling interest.26. The members of the Class are so numerous that joinder of all members

are the officers and directors of the Company at all relevant times, members of theirimmediate families and their legal representatives, heirs, successors or assigns and

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101112 is impracticable. Throughout the Class Period, the Company's common stock was13 actively traded on the AMEX. While the exact number of Class members is1415 unknown to Plaintiff at this time, and can only be ascertained through appropriate16171819

discovery, Plaintiff believes that there are at least hundreds of members in theproposed Class. Members of the Class may be identified from records maintainedby CDM or its transfer agent, and may be notified of the pendency of this action by

20 mail using a form of notice customarily used in securities class actions.21 27. Plaintiffs claims are typical of the claims of the members of the Class,22

23as all members of the Class are similarly affected by Defendants' wrongful conduct

24 in violation of federal law that is complained of herein.25 28. Plaintiff will fairly and adequately protect the interests of the members2627 of the Class and has retained counsel competent and experienced in class and28 securities litigation.

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29. Common questions oflaw and fact exist as to all members of the Class2 and predominate over any questions solely affecting individual members of theJ

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Class. Among the questions oflaw and fact common to the Class are:(a) whether the federal securities laws were violated by Defendants'acts as alleged herein;(b) whether statements made by the Defendants to the investing publicduring the Class Period misrepresented material facts about thebusiness, operations, and management of the Company; and(c) to what extent the members of the Class have sustained damages,and the proper measure of damages.

30. A class action is superior to all other available methods for the fair andefficient adjudication of this controversy since joinder of all members isimpracticable. Furthermore, as the damages suffered by individual Class membersmay be relatively small, the expense and burden of individual litigation make itimpossible for members of the Class to redress individually the wrongs done tothem. There will be no difficulty in the management of this action as a class action.

SUBSTANTI\TE ALLEGATIONS

24 31. On February 4, 2011 the Company filed with the SEC an amendedRegistration Statement on Form S-1IA in connection with the Offering. The

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Registration Statement also contained a Prospectus and both documents containedthe Company's financial results for the fiscals years ended December 31, 2007,



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2008, and 2009, interim quarterly periods thereto, and results for the first threequarters ended in fiscal year 2010.3

4 The Registration Statement declared effective on February 7, 2011 and5 the Company filed the final prospectus with the SEC on February 8, 2011 .6 33. On February 8, 2011, the Company commenced the offering of 1.278 million shares of common stock priced at $5.25 per share; for total gross proceeds9 of $6.3 million.10 34. WestPark, Gunnar and I-Bankers were the co-managers of the11

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Offering. The Underwriters had a 45-day option to purchase an additional 180,000shares of common stock from the Company to cover over-allotments.

35. Throughout the Class Period, the Defendants made false and/ormisleading statements, and failed to disclose material adverse facts about theCompany's business, operations, prospects and performance. Specifically, duringthe Class Period, Defendants made false and/or misleading statements and/or failedto disclose that the financial statements included in the Registration Statement as ofDecember 31, 2009 and 2008 were materially false and misleading and could not berelied upon as they contained material errors.

announcing that defendant De Campo had resigned.24 36. On March 21, 2011 the Company filed an 8-K with the SEC252627 37. On March 22, 2011 the Company issued a press release announcing28 that it had received a preliminary information request form the NYSE AMEX on



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March 21, 2011 requesting additional information.2 38. On March 28, 2011 the Company shocked the market, revealing,3456

among other things, the falsity of the financial statements contained in theRegistration Statement, the resignation of its auditor MaloneBailey LLP ("J\1B"),ME's fmding they could not rely on the representations of CDM's management,

78 and a formal SEC investigation. The announcement states in relevant part:910111213141516171819202122232425262728

China Century Draa-on Media, Inc. Announces Resiznation of Auditor andWithdrawal of Auclft Opinions; Amex Delisting Notice; SEC Investigation;and Formation of Special Investigation CommitteePress Release Source: China Century Dragon Media, Inc. On Monday March 28, 201 L6:05 pm EDTBEIJING, March 28, 2011 IPRNewswire! -- China Century Dragon Media, Inc. (NYSEAmex: CDM) (the "Company"), today announced that the Company's registeredindependent accounting firm, MaloneBailey LLP ("MB") has formally resigned itsengagement with the Company as of March 22, 2011. In its resignation letter, MBinformed the Company that due to discrepancies noted on customer confirmations and theauditor's inability to dir ec tly verify the Company 's bank records , they believe theseirregularities may be an ind icat ion that the accounting records have been falsified, whichwould consti tu te an il legal act. Furthermore, ME's letter notes tha t the discrepanciescould indicate a material error in previously issued financial statements. As a result, MBstated that it is unable to rely on management's representations as they relate to previouslyissued financial statements and it can no longer support its opinions related to the financialstatements as ofDecember 31, 2009 and 2008. The Company intends to seek and reta in anew auditor.On March 23,201 L the Company received notification from NYSE Amex LLC ("Amex")of its intention to delist the Company's common stock pursuant to Section 1009(d) of theAmex Company Guide based on a determination that it is necessary and appropriate forthe protection of investors to initiate immediate delisting proceedings. Based on Arnex'sreview of the res igna tion letter from MB, it determined that the Company is not incompliance with Amex listing standards and is therefore subject to immediate delisting.Specifically, the Company is subject to del is ting pursuant to Section 1003(f)(iii) in thatthe Company's ac tions and inac tions led to MB's resignation and withdrawal of its auditopinions casting material doubt on the integr ity of the Company's financial statements,which were relied upon by Arnex; MB's withdrawal of its audit opinions and that itsopinions may no longer be rel ied upon constitutes a material misstatement and a violationof Section 132(e); the withdrawal of MB's audit opinions and that there are no currentaudited financial information avai lable for the Company as a result have caused the



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240. At all relevant times, the market for CDM's common stock was an

efficient market for the following reasons, among others:45

(a) The Company's stock met the requi rements for listing, andwas listed and act ively traded on the AMEX, a highly efficient

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and automated market;(b) As a regulated issuer, CDM filed periodic public reports with

the SEC and the AMEX;(c) CDM regularly communicated with public investors VIa

established market communication mechanisms, includingthrough regular disseminations of press releases on thenational circuits of major newswire services and through

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communications with the financial press and other similarreporting services;

(d) CDM was fol lowed by several securit ies analysts employedby major brokerage firms who wrote reports that weredistributed to the sales force and certain customers of theirrespective brokerage firms during the Class Period. Each ofthese reports was publicly available and entered the publicmarketplace; and



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41. As a result of the foregoing, the market for the Company's commonstock promptly digested current information regarding the Company from allpublicly available sources and reflected such information in the Company' s stockprice. Under these circumstances, all purchasers of the Company's common stockduring the Class Period suffered similar injury through thei r purchase of theCompany's common stock at artificially inflated prices, and a presumption ofreliance applies.

Applicability of Presumption of Reliance:Affiliated Ute

42. Neither Plaintiffnor the Class need prove reliance - either individually or asa class because under the circumstances of this case, which involves a failure to disclosethe material related party transactions described herein above, positive proof of reliance isnot a prerequisite to recovery, pursuant to ruling of the United States Supreme Court in

1819 Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972). All that is2021

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necessary is that the facts withheld be material in the sense that a reasonable investormight have considered the omitted information important in deciding whether to buy orsell the subject security.

NO SAFE HARBOR43. The statutory safe harbor provided for forward-looking statements

under certain circumstances does not apply to any of the allegedly false statementspleaded in this Complaint. Many or all of the specific statements pleaded herein



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members, as alleged herein; and (2) cause Plaintiff and other members of the Class2 to purchase CDM's securities at artificially inflated prices. In furtherance of this456

unlawful scheme, plan and course of conduct, First Claim Defendants, and eachthem, took the actions set forth herein.

47. First Claim Defendants (a) employed devices, schemes, and artifices to78 defraud; (b) made untrue statements ofmaterial fact and/or omitted to state material9 facts necessary to make the statements not misleading; and (C) engaged in acts,10I I121314

practices, and a course of business that operated as a fraud and deceit upon thepurchasers of the Company's securities in an effort to maintain artificially highmarket prices for CDM's securities in violation of Section 1O(b) of the ExchangeAct and Rule IOb-5 thereunder.15

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instrumentalities of interstate commerce and/or of the mails, engaged andparticipated in a continuous course of conduct to conceal adverse materialinformation about the business, operations and future prospects of CDM asspecified herein.

39. First Claim Defendants employed devices, schemes, and artifices todefraud while in possession of material adverse non-public information, andengaged in acts, practices, and a course of conduct as alleged herein in an effort toassure investors of the Company's value and performance and continued substantialgrowth, which included the making of, or participation in the making of, untrue

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statements of material facts and omitting to state material facts necessary in order to2 make the statements made about the Company and its business operations and456

future prospects in the light of the circumstances under which they were made, notmisleading, as set forth more particularly herein, and engaged in transactions,practices and a course of business that operated as a fraud and deceit upon the7

8 purchasers of the Company's securities during the Class Period.9 40. First Claim Defendants had actual knowledge of the

misrepresentations and omissions of material facts set forth herein, or acted with101112 reckless disregard for the truth in that they failed to ascertain and to disclose such1314151617

facts, even though such facts were available. Such material misrepresentationsand/or omissions were done knowingly or recklessly and for the purpose and effectof concealing the Company's operating condition and future business prospectsfrom the investing public and supporting the artificially inflated price of its

Defendants did not have actual knowledge of the misrepresentations and omissionsCompany's financial condition throughout the Class Period, if the First Claim

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securities. As demonstrated by overstatements and misstatements of the

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alleged, they were reckless in failing to obtain such knowledge by deliberatelyrefraining from taking those steps necessary to discover whether those statementswere false or misleading.

I41. As a result of the dissemination of the materially false and misleading28 information and failure to disclose material facts, as set forth above, the market



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price of CDM's securities was artificially inflated during the Class Period. In!Iignorance of the fact that market prices of the Company's publicly-traded securitieswere artificially inflated, and relying directly or indirectly on the false andmisleading statements made by the First Claim Defendants, or upon the integrity ofthe market in which the common stock trades, and/or on the absence of materialadverse information that was known to or recklessly disregarded by the First ClaimDefendants, but not disclosed in public statements by the First Claim Defendantsduring the Class Period, Plaintiff and the other members of the Class acquiredCDM common stock during the Class Period at artificially high prices, and were, orwill be, damaged thereby.

42. At the time of said misrepresentations and omISSIOns, Plaintiff andother members of the Class were ignorant of their falsity, and believed them to betrue. Had Plaintiff and the other members of the Class and the marketplace knownthe truth regarding CDM's financial results, which was not disclosed by theDefendants, Plaintiff and other members of the Class would not have purchased orotherwise acquired their CDM's securities, or, if they had acquired such securitiesduring the Class Period, they would not have done so at the artificially inflatedprices that they paid.

43. As a direct and proximate result of the First Claim Defendants'wrongful conduct, Plaintiff and other members of the Class suffered damages inconnection with their purchases ofCDM's securities during the Class Period.

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44. This action was filed within two years of discovery of the fraud andwithin five years of each Plaintiff s purchases of securities giving rise to the cause

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of action.SECOND CLAIM

Violation of Section 20(a) OfThe Exchange Act Against the Individual Defendants7

8 45. Plaintiff repeats and realleges each and every al legation contained91011

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above as if fully set forth herein.46. The Individual Defendants acted as controlling persons ofCDM within

the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue oftheir high-level positions, agency, and their ownership and contractual rights,participation in and/or awareness of the Company's operations and/or intimateknowledge of the false financial statements filed by the Company with the SEC anddisseminated to the investing public, the Individual Defendants had the power toinfluence and control, and did influence and control, directly or indirectly, thedecision-making of the Company, including the content and dissemination of thevarious statements that plaintiff contends are false and misleading. The IndividualDefendants were provided with or had unlimited access to copies of the Company'sreports, press releases, public filings and other statements alleged byPlaintiff tohave been misleading prior to and/or shortly after these statements were issued andhad the ability to prevent the issuance of the statements or to cause the statements tobe corrected.



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47. In particular, each Individual Defendant had direct and supervisory2 involvement in the day-to-day operations of the Company and, therefore, is4 presumed to have had the power to control or influence the particular transactions

48. As set forth above, the First Claim Defendants each violated Sectiongiving rise to the securities violations as alleged herein, and exercised the same.

678 1O(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint.

1516 50. This action was filed within two years of discovery of the fraud and

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49. By virtue of their positions as controlling persons, the IndividualDefendants are liable pursuant to Section 20(a) of the Exchange Act. As a directand proximate result ofDefendants' wrongful conduct, Plaintiff and other membersof the Class suffered damages in connection with their purchases of the Company'scornmon stock during the Class Period.

within five years of each Plaintiff s purchases of securities giving rise to the causeof action.

THIRD CLAIMAgainst All Defendants

for Violation of 11 of the Securities Act2324 51. Plaintiff repeats and realleges each and every allegation contained25262728

above as if fully set forth herein. This claim is not based on, and does not allege,fraud.



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For purposes of this claim, Plaintiff expressly disclaims and excludesany allegations that could be construed as alleging fraud or intentional or recklessmisconduct as this cause of action is based expressly on claims of strict liabilityand/or negligence under the Securities Act.

53. This claim is asserted by Plaintiff against all Defendants by, and onbehalf of, persons who acquired shares of the Company's securities pursuant toand/or traceable to Registration Statement in connection with the Offering.

54. Individual Defendants as signatories of the Registration Statement, asdirectors and/or officers of CDM and controlling persons of the issuer, owed to theholders of the securities obtained through the Registration Statement the duty tomake a reasonable and diligent investigation of the statements contained in theRegistration Statement at the time they became effective to ensure that suchstatements were true and correct, and that there was no omission of material factsrequired to be stated in order to make the statements contained therein notmisleading. Defendants knew, or in the exercise of reasonable care should haveknown, of the material misstatements and omissions contained in or omitted fromthe Registration Statement as set forth herein. As such, defendants are liable to theClass.

55. Underwriter Defendants owed to the holders of the securities obtainedthrough the Registration Statement the duty to make a reasonable and diligentinvestigation of the statements contained in the Registration Statement at the time



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they became effective to ensure that such statements were true and correct and that2 there was no omission of material facts required to be stated in order to make the4 statements contained therein not misleading.5 56. None of the Defendants made a reasonable investigation or possessed67891011

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reasonable grounds for the belief that the statements contained in the RegistrationStatement were true or that there was no omission of material facts necessary tomake the statements made therein not misleading.

57. Defendants issued and disseminated, caused to be issued anddisseminated, and participated in the issuance and dissemination of, materialmisstatements to the investing public, which were contained in the RegistrationStatement, that misrepresented or failed to disclose, inter alia, the facts set forthabove. By reason of the conduct herein alleged, each defendant violated and/orcontrolled a person who violated Section 11 of the Securities Act.

58. As a direct and proximate result of Defendants' acts and omissions inviolation of the Securities Act, the market price of CDM's securities sold in theOffering was artificially inflated, and Plaintiff and the Class suffered substantialdamage in connection with their ownership of CDM's securities pursuant to theRegistration Statement.

59. CDM is the issuer of the securities sold via the Registration Statement.As issuer of the securities, the Company is strictly liable to Plaintiff and the Classfor the material misstatements and omissions therein.

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60. At the times they obtained his shares of CDM, Plaintiff and membersof the Class did so without knowledge of the facts concerning the misstatements oromissions alleged herein.

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statements and omissions in and from the Registration Statement which shouldhave been made through the exercise of reasonable diligence, and within three yearsof the effective date of the Prospectus.

62. By virtue of the foregoing, Plainti ff and the other members of theClass are entitled to damages under Section 11 as measured by the provisions ofSection 11 (e), from the defendants and each of them, jointly and severally.

FOURTH CLAIMAgainst All Defendants

for Violation of 12(a)(2) of the Securities Act Against All Defendants

63. Plaintiffs repeat and reallege each and every allegation containedabove as if fully set forth herein. This claim is not based on, and does not allege,fraud.

64. For purposes of this claim, Plaintiff expressly disclaims and excludesany allegations that could be construed as alleging fraud or intentional or recklessmisconduct as this cause of action is based expressly on claims of strict liabilityand/or negligence under the Securities Act.



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65. Defendants were sellers, offerors , underwriters and/or solicitors of2 sales of the CDM securities offering pursuant to the February 2011 Prospectus.4 66. The Prospectus contained untrue statements of material facts, omitted5 to state other facts necessary to make the statements made not misleading, and6 concealed and failed to disclose material facts. Defendants' actions of solicitation78 included participating in the preparation of the false and misleading Prospectus.9101112131415161718

67. Defendants owed, to the purchasers of CDM securities which weresold in the February 2011 Offering, the duty to make a reasonable and diligentinvestigation of the statements contained in the Prospectus, to insure that suchstatements were true and that there was not omission to state a material factrequired to be stated in order to make the statements contained therein notmisleading. These Defendants knew of, or in the exercise of reasonable care shouldhave known of, the misstatements and omissions contained in the Offeringmaterials as set forth above.19

20 68. Plaintiff and other members of the Class purchased or otherwise21222324

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acquired CDM securities pursuant to and traceable to the defective Prospectus.Plaintiff did not know, or in the exercise of reasonable diligence could not haveknown of the untruths and omissions.

69. Plaintiff, individually and representatively, hereby offer to tender toDefendants those securities which Plaintiff and other class members continue to

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own, on behalf of all members of the Class who continue to own such securities, in2 return for the considerations paid for those securities together with interest thereon.34 70. By reason of the conduct alleges herein, these Defendants violated,5 and/or controlled a person who violated, section 12(a)(2) of the Securities Act.6 Accordingly, Plaintiffs and members of the Class who hold CDM securities7891011

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purchased pursuant and/or traceable to the February 2011 IPO have the right torescind and recover the consideration paid for their CDM securities and, herebyelect to rescind and tender their CDM securities to' the Defendants sued herein.Plaintiff and class members who have sold their CDM securities are entitled torescissionary damages.

71 . Less than three years elapsed from the time that the securities uponwhich this count is brought were sold to the public to the time of the filing of thisaction. Less than one elapsed from the time when Plaintiff discovered or reasonablycould have discovered the facts upon which this count is based to the time of thefiling of this action.

FIFTH CLAIMViolations of Section 15 of the Securities Act

Against the Individual Defendants72. Plaintiffs repeat and reallege each and every allegation contained

above as if fully set forth herein. This claim is not based on, and does not allege,fraud.



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, .

Dated: March 31, 20112":J4567891011121314151617 " - - - - .- - - -------1819202122,.,,,_.:J

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Respectfully submitted,THE ROSEN LAW FIRM1 P.A.

Laurence M. Rosen, Esq. (SBN 219683)THE ROSEN LAW FIRM. P.A.333 South Grand Avenue, 25th FloorLos Angeles, CA 90071Telephone: (213) 785-2610Facsimile: (213) 226-4684Email: lrosen((l)rosenlelIal.comCounsel for Plaintiff



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. , . . . ' .Rosen, LaurenceFrom:Sent:To:Subject:

Dear daniel s katz,

[email protected], March 29, 2011 6:44 [email protected] of Receipt of Certification

Wehave received your certification in the China Century Dragon Media, Inc. class action litigation. Thank youfor submitting your information, Below is a copy of your certification - please retain it for your records. If youhave any questions, please feel free to contact us at 1-866-rosenJegal (866-767-3653) or via e-mail [email protected] increasing frequency, we find that our new clients were victimized by more than one company. I f youthink you may have lost monies in the market due to the dishonest acts or statements of a different company andwould like it to be investigated, free of charge, please email usatreportfraud(a)rosenlegal.com.Sincerely,The Rosen Law Firm P.A.

CERTIFICAnONCertification and Authorization of Named PlaintiffPursuant to Federal Securities LawsThe individual or institution listed below (the "Plaintiff") authorizes and, upon execution of the accompanyingretainer agreement by The Rosen Law Finn P.A., retains The Rosen Law Finn P.A. to file an action under thefederal securities laws to recover damages and to seek other relief against China Century Dragon Media, Inc..The Rosen Law Finn P.A. will prosecute the action ana contingentieebasisandwill advance all.costs andexpenses. The China Century Dragon Media, Inc. Retention Agreement provided to the Plaintiff is incorporatedby reference, upon execution by The Rosen Law Finn P.A.First name: danielLast name: katzAddress:

REDACTED

Email:Phone:The PlaintiffCertifies that:


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. .< 1 I

I. Plaintiff has reviewed the complaint and authorized its filing.2. Plaintiffdid not acquire the security that is the subject of this action at the direction of plaintiffs counselor inorder to participate in this private action or any other litigation under the federal securities laws.3. Plaintiff is willing to serve as a representative party on behalfof a class, including providing testimony atdeposition and trial, if necessary.4. Plaintiff represents and warrants that he/she/it is fully authorized to enter into and execute this certification.5. Plaintiff will not accept any payment for serving as a representative party on behalfof the class beyond thePlaintiffs pro rata share of any recovery, except such reasonable costs and expenses (including lost wages)directly relating to the representation of the class as ordered or approved by the court.6. Plaintiffhas made no transaction(s) during the Class Period in the debt or equity securities that are the subjectof this action except those set forth below:Shares Purchased:

Purchase Date(s): 0311 0111Number of shares: 300Price per Share: 5.04Purchase Date(s): 03/10/11Number of shares: 800Price per Share: 5.03Purchase Date(s): 03110111Number of shares: 2000Price per Share: 5.0399Purchase Date(s): 03/10/11Number of shares: 700Price per Share: 5.03Purchase Date(s): 03/10/11Number of shares: 4000Price per Share: 5.04Purchase Date(s): 03110111Number of shares: 2200Price per Share: 5.0299Purchase Date(s): 03111/11Number of shares: 1500Price per Share: 4.55Purchase Date(s): 03/11/] INumber of shares: 2000Price per Share: 4.55

2


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I . ' , .

Shares Sold:

7. During the three years prior to the date ofthis Certification, Plaintiffhas not sought to serve or served as arepresentative party for a class in an action filed under the federal securities laws except if detailed below:

I declare under penalty of perjury, under the laws of the United States, that the information entered is accurate:yesBy clicking on the button below, I intend to sign and execute this agreement: yesClicked to Submit Certification in the China Century Dragon Media, Inc. ActionSigned pursuant to California Civil Code Section 1633.1, et seq. - Uniform Electronic Transactions Act

I


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UNlTED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIACIVIL COVER SHEET

I (a) PLAINTIFFS (Check box ifyou are representing yourself0)DAN KATZ, INDIVIDUALLY AND ON BEHALF OF ALL OTHERSSIMILARLY SITUATED,

DEFENDANTSCHINA CENTURY DRAGON MEDIA, INC., et al. (see attached)

(b) Attorneys (Firm Name, Address and Telephone Number. If you are representingyourself, provide same.)Laurence M. Rosen, Esq. (SBN 219683), THE ROSEN LAW FIRM, P.A., 333South Grand Avenue, 25th Floor, Los Angeles, CA 90071, Tel: (213) 785-2610,Fax: (213) 2264684, Email: lrosen@rosenlegalcom

Attorneys (If Known)

II. BASIS OF JURISDICTION (Place an X inone box only.) III. CITIZENSHIP OF PRINCIPAL PARTIES - For Diversity Cases Only(Place an X in one box for plaintiffand one for defendant.)

o 2 U.S. Government Defendant 04 Diversity (Indicate Citizenship Citizen of Another Stateof Parties in Item III)

o I U.S. Government Plaintiff il1'3 Federal Question (U.S.Government Not a Party) Citizen ofThis State PTF DEF PTF DEF01 01 Incorporated or Principal Place 0 4 0 4

of Business in this State0 2 0 2 Incorporated and Principal Place 0 5 05

of Business in Another StateCitizen or Subject of a Foreign Country 0 3 0 3 Foreign Nation 0 6 06

IV. ORIGIN (Place an X inone box only.)Ffil Original 02 Removed from 0 3 Remanded fromProceeding State Court Appellate Court 0 4 Reinstated or 0 5 Transferred from another district (specify): 0 6 Multi-Reopened District

Litigation07 Appeal to DistrictJudge from

Magistrate JudgeV. REQUESTED IN COMPLAINT: JURY DEMAND: ~ Y e s 0 No (Check 'Yes' only ifdemanded in complaint.)CLASS ACTION under F.R.C.P. 23: riYes 0 No 0 MONEY DEMANDED IN COMPLAINT: SVI. CAUSE OF ACTION (Cite the U.S. Civil Statute under which you are filing and write a briefstatement of cause. Do not cite jurisdictional statutes unless diversity.)

Class Action for Violations of the Federal Securities Laws, 15U.S.c. 78j(b) and 78I(a). 15U.S.C. 77k and 770VII. NATUREOF SUIT (Place an X in one box only.)

016001900195

01100120013001400150

E r ~ ~ \ ~ 3 r ~ B _ { ~ ~ ~; 0 710 Fair Labor StandardsAct

0720 LaborlMgmt.Relations

0730 LaborlMgmt.Reporting &Disclosure Act

0740 Railway Labor Acto 790 Other LaborLitigationo 791 Empl Ret. Inc.

" " " ~ ' I h . , " ~ ~ ~ t r . M l - - ~ , , - . c .~ ' i P A l ; l I 1 ~ J I < ~ ' I D O J . l J : S . t ; % l . io 820 Copyrights0830 Patento 840 Trademark1 ! 5 ~ 1 $ ~ 1 j j ~ i , ' f s ~ ~ ~ ~ !o 861 HIA (139511)o 862 Black Lung (923)o 863 DIWCIDIWW

(405(go 864 ssmTitle XVI0865 RSI (405(g: l i ~ f t ~ ; f ~ $ U l I $ i ; ~ io 870 Taxes (U.S. Plaintiffor Defendant)o 871 IRSThird Party 26USC 7609

AgricultureOther Food &DrugDrug RelatedSeizure ofProperty 21 USC881Liquor LawsR.R. & TruckAirline RegsOccupationalSafety /HealthOther

Motions toVacate SentenceHabeas CorpusGeneralDeath PenaltyMandamus/OtherCivil RightsPrison Condition

0690

0630064006500660

0625

InsuranceMarineMiller ActNegotiable InstrumentRecovery ofOverpayment &Enforcement ofJudgmento 151 Medicare Acto 152 Recovery of DefaultedStudent Loan (Excl.Veterans)Recovery ofOverpayment ofVeteran's BenefitsStockholders' SuitsOther ContractContract ProductLiabilityo 196 Franchise 0 368

: ' , ? ~ m r t t ~ i t 6 1 ' E R t Y ; J G ' : ! : 1o 210 Land Condemnationo 220 Foreclosureo 230 Rent Lease & Ejectmento 240 Torts toLand0245 Tort Product Liabilityo 290 AII Other Real Property

0480049008100850

-------G-V--H 2 7 6 i ~ -FOR OFFICE USE ONLY: Case Number: .

AFTER COMPLETING THE FRONTSIDE OF FORM CV71, COMPLETE THE INFORMATION REQUESTED BELOW.CV-71 (05/08) CIVIL COVER SHEET Page ' of2


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UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIACIVILCOVER SHEET

VJJI(a). IDENTICAL CASES: Has this action been previously filed inthis court and dismissed. remanded or closed? IlfNo 0 YesIf yes, list case number(s): _VIJJ(b). RELATED CASES: Have any cases been previously filed inthis court that are related to the present case? riNo 0 YesIf yes, list case number(s): _Civil cases are deemed related ifa previously filed case and the present case:(Check all boxes that apply) 0 A. Arise from the same or closely related transactions, happenings, or events; orDB . Call for determination of the same or substantially related or similar questions of law and fact; or

DC For other reasons would entail substantial duplication of labor if heard by differentjudges; oro D. Involve the same patent, trademark orcopyright, and one of the factors identified above ina, b orc also is present.IX. VENUE: (When completing the following information, use an additional sheet if necessary.)(a) List the County inthis District; California County outside of this District; State ifother than California; or Foreign Country, inwhich EACH named plaintifTresides.0 Check here if the government, its agencies oremnlovees is a named olaintiff. If this box ischecked, ao to item(b).County in thisDistrict:' CaliforniaCounly outside of this District; State, if other than California; or Foreign Country

Florida

(b) Listthe County in this District; California County outside of this District; State ifother than California; or Foreign Country, in which EACH named defendant resides.0 Check here ifthe government, its agencies oremolovees is a named defendant. If this box ischecked, l!.0 to item (c),County in this District:' California County outside of this District; State, if other than California; or Foreign Country

People's Republic of China

,County in this District:' CaliforniaCounty outside of this District; State, if other than California; or Foreign Country

Los Angeles

(c) List the County inthis District; California County outside of this District; State if other than California; or Foreign Country, in which EACH claim arose.Note' In land condemnation cases use the location of the tract ofland Involved

Los Angeles, Orange, San Bernardino, Riverside, Ventura, Santa Barbara, or San Luis Obispo CountiesNote: Inland condemnation cases use the location of the tract of land i olvedx. SIGNATURE OF ATIORNEY (OR PRO PER): Date 3/3112011----"-"""""---#- ' ' -+. ........_ - - ~ - - -

Notice to CounseVParties: The CV-71 (1S-44) Civil Cover Sheet and the information contained herein neither replace nor supplement the filing and service of pleadingsorother papers as required by law. This form, approved bythe Judicial Conference of the United States inSeptember 1974, isrequired pursuant to Local Rule 3-1 isnot filedbut isusedby the Clerk oftheCourt for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet.)

Key to Statistical codes relating to Social Security Cases:Nature of Suit Code Abb rev iat io n S ub st an ti ve Statement of Cause of Action

All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42U.S.C (g

All claims filed by insured workers for disability insurance benefits under Title 2 of the Social Security Act, asamended; plus all claims filed for child's insurance benefits based on disability. (42 U.S.C 405(gAll claims filed for widows or widowers insurance benefits based on disability under Title 2 of the Social SecurityAct, as amended. (42 U.S.C. 405(g))All claims for supplemental security income payments based upon disability filed under Title 16of the Social SecurityAct, as amended.

Page 2 of2IVILCOVER SHEET

All claims for health insurance benefits (Medicare) under Title 18, Pan A, of the Social Security Act, asamended.Also, include claims by hospitals, skilled nursing facilities, etc., for certification as providers of services under theprogram. (42 U.S.C 1935FF(bAll claims for "Black Lung" benefits under Title 4, Pan B,of'tbe Federal Coal Mine Health and Safety Act of 1969.(30 U.S.C 923)

861 HIA

862 BL

863 DIWC

863 DIWW

864 ssm865 RSI

CV-7\ (05/08)


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ATTACHMENT

PLAINTIFFS

DAN KATZ, INDIVIDUALLY AND ON BEHALF OF ALL OTHERSSIMILARLY SITUATED,

DEFENDANTSCHINA CENTURY DRAGON MEDIA, INC., HAIMING FU, DAPENG DUAN,HUHUA LI, ZHIFENG YAN, DAVID DE CAMPO, YUE LU, FANG YUAN,WESTPARK CAPITAL, INC., JOSEPH GUNNAR& CO, LLC, I-BANKERSSECURITIES, INC., AND AEGIS CAPITAL CORPORATION,

2011 apr - katz v china century dragon complaint

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