Builders FirstSource, Inc. (BLDR)
Whether directors and officers of Builders FirstSource, Inc. (BLDR) breached their fiduciary duties to the company and its shareholders.
Investigation
01/22/2022
Initial Lawsuit
08/16/2022
Lawsuit Progression
10/17/2022
Did 1Globe Capital LLC mislead shareholders of Sinovac Biotech Ltd. (traded “SVA”) regarding its intent to acquire the company?
This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.
A lawsuit was subsequently filed. We update this post regularly.
05/13/2020
The Securities and Exchange Commission (SEC) issues a Cease-and-Desis Order pursuant to Section 21C of the Securities Exchange Act of 1934 against 1Globe Capital, LLC and Jiaqiang “Chiang” Li.
“These proceedings arise out of multiple violations of Section 13(d) of the Exchange Act and related rules by Li and 1Globe Capital, a company he owns. Section 13(d) requires any person, including a group, who directly or indirectly acquires beneficial ownership of more than five percent of certain equity securities to file a statement with the Commission, within ten days, disclosing information relating to such beneficial ownership. Section 13(d) is a key regulatory provision that allows shareholders and potential investors to evaluate substantial shareholdings and the implications of such shareholdings for their own investment in the security. Whenever a material change occurs to the facts set forth in any disclosure statement filed on Schedule 13D, the filing must be promptly and truthfully amended.
By the end of 2017, 1Globe Capital, Li, and related parties together held nearly onethird of the common stock of issuer Sinovac Biotech Ltd. (“Sinovac”) and participated in an activist plan to replace four of five incumbent directors through a shareholder vote at Sinovac’s 2018 annual shareholder meeting in Beijing, but failed to disclose material information that is required in a Schedule 13D. Specifically, 1Globe Capital and Li failed to disclose their full beneficial ownership of Sinovac stock, inclusive of substantial shares held by related parties, and their participation in a plan, led by other investors, thereby depriving existing and potential shareholders of information necessary to make fully informed investment decisions.“
See more on Factual TimelinePlaintiff, an institutional asset manager shareholder of Sinovac, brings this action on behalf of all holders of Sinovac stock other than the defendants who sold their shares between April 11, 2016 (the earliest possible date on which their Rights could have become exercisable) and February 22, 2019 (when Sinovac finally announced an Exchange under the Rights Agreement), to redress the harm that defendants’ fraudulent conduct has caused them to suffer.
According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:
Excerpt
“The details of Defendants’ deceptive tactics are laid out in a Cease-and-Desist Order that the Securities and Exchange Commission issued on May 13, 2020 against Li and 1Globe (the “SEC Order”). The SEC determined that Li’s and 1Globe’s deceptive actions “depriv[ed] existing and potential shareholders”—such as Plaintiff and the Class—“of information necessary to make fully informed investment decisions.” Moreover, the SEC imposed $290,000 in penalties on Li and 1Globe for their violations of their disclosure requirements under Section 13(d). […]
Defendants also falsely represented Li’s stake in Sinovac by failing to update their disclosure forms and filing additional false forms that omitted substantial amounts of stock that Li directed family members to purchase in separate accounts beginning in May 2016. By the end of 2017, Li had acquired a 31% stake in Sinovac, but still disclosed only his and 1Globe’s 16.4% and 6.19% positions.
In addition to misrepresenting the amount of Sinovac stock that Li and 1Globe owned, Defendants misrepresented their secret plan to act in concert with other shareholders to try to take control of the Company. While Sinovac knew that Li and 1Globe were acting in concert based on the Company’s private communications with them during the battle for control of the Company, this information was not known to public shareholders.
Plaintiff and the Class are Sinovac shareholders that have been caught in the middle of this battle between Sinovac’s management and 1Globe for control of the Company. While Plaintiff and the Class also seek to receive fair value if Sinovac is taken private, Defendants’ behind-the-scenes scheming impeded this effort. Instead, Defendants have caused Plaintiff and the Class substantial harm by making them lose their ability to collect at least millions of shares that they would have otherwise been entitled to under the Rights Agreement that Sinovac adopted on March 28, 2016.
In addition, Defendants’ actions caused even more harm because their misrepresentations and omissions concerning 1Globe’s and Li’s true ownership of Sinovac stock, and their efforts to take control of the Company, artificially suppressed the price of Sinovac stock from reaching the value that this information would have conferred. The SEC Order explains that “Section 13(d) is a key regulatory provision that allows shareholders and potential investors to evaluate substantial shareholdings and the implications of such shareholdings for their own investment in the security.” 1Globe’s and Li’s misrepresentations and failures to make the disclosures that they were required to make under Section 13(d) deprived Plaintiff and the Class of being able to evaluate the implications of such a large shareholder and potential acquiror for their investment decisions.
Defendants have also harmed Sinovac’s shareholders by interfering with the Rights Agreement. Sinovac has used Defendants’ actions as a pretext to delay implementing the Rights Agreement as of the proper date. This breach by Sinovac of the Rights Agreement is a direct and foreseeable result of Defendants’ trying to evade the Rights Agreement by hiding the full extent of their ownership of Sinovac stock and their agreements with other shareholders in the battle for control of Sinovac.”
The lead plaintiff deadline has passed, we will update this page as the lawsuit progresses
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