Shareholders launched a class action against Asia Packaging Group Inc. (APX), executives Robert Wilson, Brian Birmingham, Jin Kuang, Micheal Raymont, George Dorin and accounting firm Manning Elliott LLP for misrepresentation.
Lead plaintiff F. Philip Wilhelmsen filed a notice of civil claim in BC Supreme Court on April 25.
Wilhelmsen claims the company “failed to secure any, or any effective control over its subsidiaries and their operating entities, including their boards of directors, corporate seals and records and bank accounts,” the claim states. “In the end result, APX completely lost control of all of its material assets, and eventually became unable to meet its various Canadian corporate obligations.”
Wilhelmsen says class members lost the entire value of their investment and alleges that company insiders’ trading activity ramped up before the investing public was told of the company’s “dire circumstances.”
According to the complaint, APX issued a press release in November 2013, revealing that its principal shareholders “could no longer be counted on to discharge their duties and obligations towards” the company. In addition, the firm had previously reported in regulatory filings that it had $8.8 million in the bank, but the cash was “illusory” because it was controlled by its principal shareholders through bank accounts in China.
After the news broke, the Investment Industry Regulatory Organization of Canada halted trading in the firm’s stock, followed by regulators in B.C. and Alberta issuing cease-trading orders of their own, the claim states.
The class seeks damages for misrepresentation, rescission and declaratory relief on behalf of B.C. residents who purchased APX securities between April 26, 2011, and November 6, 2013.
None of the class’ allegations have been proven in court and the defendants had not filed a response by press time.
