By RTT News,
June 26, 2014, 09:19:00 AM EDT
(RTTNews.com) - China Mobile Games and Entertainment Group Limited ( CMGE ) said Thursday that it strongly rejected recent allegations of employee misconduct. To the best of the company's knowledge, the company is currently unaware of any evidence of bribery.
However, the independent committee has been formed to look into and address the market speculations circulating in the market. An external law firm will be appointed to assist the independent committee. The Company will announce further update on the results of its independent committee's investigation.
The company said that its CEO Xiao Jian believes that Ying Shuling and the other 8 executives job reassignments would be better utilized in other capacities.
On 20 June, China Mobile Games and Entertainment announced that it implemented organizational restructuring and personnel changes in its game publishing business to streamline the company's operations to better position it for profitable long-term growth.
The company made the transition from a feature phone game developer to a mobile game publisher and developing platform, leading to rapid growth. Since Shuling Ying was asked to oversee the Company's publishing business in October 2013, its publishing business has grown significantly, and now has teams of over 700 employees located in Beijing, Shanghai, Shenzhen and Chengdu.
However, the company's rapid growth has also created operational challenges that it must carefully manage, including redundancies within its businesses which have resulted in inefficiencies.
The company stated that the chief executive officer had been tasked with conducting organizational reviews and structural realignments.
As part of the organizational restructuring of its publishing business, on June 19, 2014 the company removed nine employees from their positions in the publishing business, including Ying. The company noted that these employees were awaiting reassignments within the Company.
On, June 23, 2014, Gainey McKenna & Egleston announced that a class action lawsuit had been filed in the United States District Court for the Southern District of New York on behalf of all persons who purchased or otherwise acquired the securities of China Mobile Games and Entertainment Group during the period between September 20, 2012 through June 19, 2014, including purchasers in China Mobile's public offering that closed on March 26, 2014.
The complaint alleged that Defendants and underwriters failed to disclose and/or materially misstated China Mobile's true financial condition. Specifically, the Complaint alleged that Defendants made false and misleading statements and/or failed to disclose that China Mobile was engaged in a bribery scheme within the Company's game publishing business; China Mobile was engaged in undisclosed related party transactions, and China Mobile lacked internal controls.
The Complaint alleged that on June 19, 2014, the price of China Mobile shares fell $4.27 a share before being halted by the NASDAQ on reports that China Mobile had removed nine executives, including the Company's President in connection with the alleged bribery. Chinese internet news media reported that the misconduct also involved undisclosed related party transactions with China Mobile.
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