A class action lawsuit was filed on behalf of investors who purchased the securities of Universal Travel Group, Inc. (NYSE:UTA) during the period from January 19, 2010 to April 12, 2011
The Complaint asserts violations of the federal securities laws against Universal Travel and its officers and directors for issuing false and misleading information to investors about the financial and business condition of the Company. The Complaint alleges that the Universal Travel misstated (a) the nature and quality of the companies it acquired during the Class Period; and (b) the adequacy of the Company's internal controls. As a result, the Complaint alleges that the Company's periodic reports filed with the SEC and public statements were materially false and misleading.
On March 8, 2011 a firm called Glaucus Research Group issued a report (the "Report") setting forth numerous red flags of fraud, ranging from alleged misstatements concerning the Company's online travel business, cash balances, and the Company's purported relationship with a large on-line travel company. The Report also revealed that the financial statements of the companies Universal Travel acquired in 2010 that were filed with authorities in China showed only a fraction of the revenue, asset value and income, contrary to the statements Universal Travel made to investors about the acquired companies. On March 29, 2011 the Company announced that it would postpone its earnings announcement for the fiscal year ended December 31, 2010.
On April 12, 2011 trading in the Company's stock was halted. On April 14, 2011, the Company filed an 8-K with the SEC announcing that the Company's auditor had resigned. According to the 8-K, the auditors believed that the Company and/or its Audit Committee was "being non-responsive, unwilling or reluctant to proceed in good faith and imposing scope limitations on [the auditors'] audit procedures." The auditors also noted that they "had lost confidence in the Board of Directors' and the Audit Committee commitment to sound corporate governance and reliable financial reporting."
