CTE Sinotech (MM)

RADNOR, Pa., Sept. 2, 2011 /PRNewswire/ -- The following statement was issued today by the law firm of Kessler Topaz Meltzer & Check, LLP:

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of those who purchased or otherwise acquired  the American Depository Shares ("ADS" or "shares") of SinoTech Energy Limited ("SinoTech" or "CTE" or the "Company") between November 3, 2010 and August 16, 2011, inclusive (the "Class Period"), including purchasers of SinoTech's shares that were issued pursuant or traceable to the Company's Initial Public Offering ("IPO" or the "Offering") on or about November 3, 2010.  If you are a member of this class, you can view a copy of the Complaint or join this class action online at http://www.ktmc.com/cases/sinotech/.

Members of the class may, not later than October 18, 2011, move the Court to serve as lead plaintiff of the class.  A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation.  In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class.  Your ability to share in any recovery is not, however, affected by the decision of whether or not to serve as a lead plaintiff.  Any member of the purported class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.  

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP (Darren J. Check, Esq. or David M. Promisloff, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@ktmc.com.  For additional information about this lawsuit, or to join the class action online, please visit http://www.ktmc.com/cases/sinotech/ .

The Complaint charges SinoTech and certain of its officers and directors with violations of the Securities Exchange Act of 1934.  The Complaint also charges SinoTech, certain of its officers and directors, certain underwriters and the Company's former accounting firm with violations of the Securities Act of 1933.  SinoTech describes itself as a provider of enhanced oil recovery ("EOR") services in China.  More specifically, the Complaint alleges that the defendants failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company's only import agent, who accounted for over $100 million worth of oil drilling equipment orders, was a shell company with no operations; (2) that the Company's sole chemical supplier was a shell company with little or no revenues; (3) that the Company's largest subcontracting customer, which provides the majority of SinoTech's revenues, had minimal revenues and unverifiable operations; (4) that the Company's financial results filed with the SEC were inconsistent with financial filings made to Chinese authorities; (5) that the Company had engaged in undisclosed related-party transactions; (6) that as a result, the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (7) that the Company lacked adequate internal and financial controls; (8) that, as a result of the foregoing, the Company's positive public statements and its financial statements were materially false and misleading at all relevant times; and (9) that the Offering Materials issued in connection with the Company's November 3, 2010 IPO were materially misleading and inaccurate at the time they were issued.

On August 16, 2011, research analyst Alfred Little published a report entitled "SinoTech Energy: Enhanced Oil Recovery or Capital Extraction?" (the "Report").  The Report contained a number of shocking revelations based on Alfred Little's research into SinoTech, including that the Company's sole import agent, sole chemical supplier, and five largest subcontracting customers, all appeared to be shell companies with little or no actual operations.  The Report also revealed that the Company's oil drilling technology was questionable, mispriced and uncompetitive.  Additionally, the Report revealed that the Company's financial statements as filed with the Chinese Government's State Administration of Industry and Commerce ("SAIC") differed from those that the Company filed with the SEC, and indicated that SinoTech had negligible business operations.  Moreover, the Report revealed that the Company's board of directors lacked independence and effective oversight of SinoTech management, as evidenced by undisclosed related party dealings. Upon the release of this news, the Company's shares declined $1.67 per share, or over 41 percent, to close on August 16, 2011 at $2.35 per share, on unusually heavy trading volume.  

Later on August 16, 2011, and following the publication of the Report, NASDAQ halted trading in the Company's ADS, and stated that they would remain halted until the Company "fully satisfied NASDAQ's request for additional information."  

Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Kessler Topaz Meltzer & Check, which prosecutes class actions in both state and federal courts throughout the country.  Kessler Topaz Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world.

For more information about Kessler Topaz Meltzer & Check, or for additional information about participating in this action, please visit www.ktmc.com.

SOURCE Kessler Topaz Meltzer & Check, LLP