Frequently Asked Questions

  1. What are the differences between the Class Action Settlements and the Fair Fund?

    The Class Action Settlements compensate those who purchased Puda Coal common stock, purchased Puda Coal call options, or sold Puda Coal put options during the period December 8, 2010 through and including April 11, 2011. The Fair Fund distribution only compensates those who purchased Puda Coal common stock in the Secondary Offering. Note that even if you decide to “opt-out” of participating in the Class Action Settlements, you may still participate in the Fair Fund if you submit a Claim Form.

    There are eligibility rules that apply to each distribution. The rules are described in the respective Distribution Plans and Plans of Allocation, which can be found on the Important Documents page. If you have any questions, please contact Epiq Class Action & Claims Solutions, Inc. (“Epiq” or “Distribution Agent/Administrator”) at info@pudacoalfund.com or contact the help line for this matter 877-276-7324.

    Back To Top
  2. Do I need to file a Claim for One or Both of the Proceedings?

    There are separate Proofs of Claim for each proceeding. You do not need to file your trade documentation twice but you do need to file two claims if you want to participate in both distributions. You may download copies of the Proofs of Claim from the Important Documents page.

    All Proofs of Claim must be signed and submitted to the address provided below, postmarked no later than May 13, 2016. Claims postmarked after May 13, 2016 will not be eligible to participate in the distribution of the Fair Fund or the Class Action Settlements.

    Macquarie Capital Fair Fund / Puda Coal Securities Litigation
    PO Box 2838
    Portland, OR 97208-2838

    Back To Top
  3. What is this about? Background to the Fair Fund and Class Action Settlements

    The Fair Fund and the Class Action Settlements arise out of the following events. Puda Coal’s former Chairman Ming Zhao (“Zhao”) is accused of executing a fraudulent scheme in 2009 by transferring Puda Coal’s 90% ownership interest in its primary operating subsidiary, Shanxi Puda Coal, to himself, rendering Puda Coal an empty shell. Subsequently, Puda Coal concealed the transfer and represented to investors that it continued to own Shanxi Puda Coal. The unlawful transfer was publicly revealed in April 2011.

    Puda Coal is a U.S. issuer of securities. It engaged in a $108 million Secondary Offering on December 8, 2010. Macquarie Capital (USA) Inc. (“Macquarie”) and Brean Murray, Carret & Co. (“Brean”) (together, the “Underwriters”) served as Underwriters for the Secondary Offering. Lawrence S. Wizel and C. Mark Tang (the “U.S. Directors”) were serving as the U.S. Directors for Puda Coal. An investigative report prepared for Macquarie during the due diligence it conducted for the Secondary Offering uncovered the fact that Puda Coal no longer owned Shanxi Puda Coal. Despite that report, the Offering Documents for the Secondary Offering continued to describe Shanxi Puda Coal as owned by Puda Coal.

    As a result of a Securities and Exchange Commission (“SEC”) investigation of Puda Coal and the Secondary Offering, Macquarie agreed to pay $15,000,000 into the Fair Fund and to pay the costs of administering the Fair Fund distribution.

    The Fair Fund is to be distributed to Puda Coal investors harmed as a result of purchasing Puda stock in the Secondary Offering.

    The SEC has also sued Zhao and Liping Zhu (“Zhu”), Puda Coal’s CEO. Default judgments have been entered against both of these individual defendants; neither one of the individual defendants thus far has paid any of the amounts ordered to be paid.

    The Class Action complaint asserts securities law claims against Puda Coal, Zhao, Macquarie, Brean, the U.S. Directors, Moore Stephens Hong Kong and Moore Stephens, P.C. (the “Auditor Defendants”), and three additional Puda Coal Officers. The parties participating in the Class Action have engaged in extensive discovery of the facts underlying the Class’s claims and expert discovery. In settlement of the Class Action, Macquarie has agreed to pay $7.4 million; Brean has agreed to pay $1.2 million, and the U.S. Directors have agreed to pay $100,000 and assign certain claims against their insurance company, PICC. These Class Action Settlements collectively provide a fund of $8.7 million.

    In the Class Action, the Court has entered defaults against Puda Coal and Zhao, dismissed the claims against the Auditor Defendants on summary judgment, and dismissed the claims against the three additional Puda Coal Officers because they reside in China and could not be found and served with the complaint. The Class Action Plaintiffs are appealing the dismissal of the claims against the Auditor Defendants.

    Back To Top
  4. Who Is Eligible to Participate in the Fair Fund?

    Any person or entity that purchased Puda Coal common stock in the Secondary Offering, and held any of those Secondary Offering shares through the close of trading on April 7, 2011, may be eligible for compensation from the Fair Fund subject to certain eligibility limitations described in the Distribution Plan. You must file a claim in the Fair Fund distribution if you want to participate in the Fair Fund distribution.

    If you did not purchase shares of Puda Coal in the Secondary Offering you are not eligible for compensation from the Fair Fund, but you may still be eligible to receive compensation from the Class Action Settlements.

    Back To Top
  5. Who Is Eligible to Participate in the Class Action Settlements?

    The Court has preliminarily certified in the Class Action a Settlement Class that consists of those persons or entities that purchased Puda common stock or call options or sold Puda put options during the period from December 8, 2010 through and including April 11, 2011 (the “Settlement Class Period”).

    Even if you fall within the Settlement Class definition, you are not a member of the Settlement Class if you:

    1. are one of the Defendants;
    2. were a partner, executive officer, director, controlling person, subsidiary, or affiliate of any Defendant during the Settlement Class Period;
    3. are a member of any Defendant’s immediate family;
    4. a Person in which any Defendant has a Controlling Interest; and/or
    5. are a legal representative, heir, estate, administrator, predecessor, successor or assign of any of the foregoing Excluded Persons.

    Also excluded from the Settlement Class is any Person that files a valid and timely request for exclusion in accordance with the requirements set forth in the Joint Notice (see FAQ 10).

    Back To Top
  6. How Much Will My Payment Be?

    For complete information on how payments will be calculated for those who file Claim Forms, please review the Plans of Allocation for the Fair Fund and for the Class Action. The Fair Fund and the Class Action Plans of Allocation are available on the Important Documents page. The amount of compensation will vary based on the exact dates of transactions in Puda Coal common stock during the relevant period, the number of shares of Puda Coal common stock purchased in the Secondary Offering and held, and the total dollar value of eligible claims submitted to the Fair Fund and the Class Action Settlements. Distribution payments shall only be made to Eligible Claimants whose total payment for a claim exceeds $10.00.

    Back To Top
  7. What Happens if I Do Nothing at All?

    If you do nothing you will receive no payment from either the Fair Fund or the Class Actions. With respect to the Class Action Settlements you would also give up your rights and be bound by the Settlements and judgments that will be entered by the Court.

    Back To Top
  8. How Much Will Be Distributed to Investors from the Class Action Settlements?

    If the Class Action Settlements are approved by the Court, after certain deductions (including the costs of notice and administration, taxes, any attorneys’ fees and litigation expenses, as well the amount of any Reimbursement Award to the Class Action Plaintiffs granted by the Court), the balance of the Settlement Fund, plus accrued interest, will be distributed to eligible members of the Settlement Class who have timely submitted a Claim Form (the “Net Settlement Fund”). If only one or more of the Settlements is approved, then the Settlement Fund will consist only of the amount paid for the Settlement(s) approved.

    Your share of the Net Settlement Fund will depend on several factors, including:

    • how many Settlement Class Members submit valid Claim Forms;
    • the total Recognized Losses represented by the valid Claim Forms;
    • the number of shares of Puda common stock or call options that you purchased or put options that you sold during the Settlement Class Period;
    • how much you paid for the shares;
    • when you purchased; and
    • if you sold your shares and, if so, for how much.

    The method by which the Claims Administrator will determine your share of the Net Settlement Fund is described in Exhibit B. Defendants are not entitled to get back any portion of the Settlement Fund if and when their Settlement becomes effective.

    Plaintiffs’ damages expert has opined that approximately 12.7 million shares of Puda common stock have been damaged as a result of the allegedly wrongful conduct. Thus, assuming that the owners of all affected shares elect to participate, the average per-share recovery from the combined Settlement Fund would be approximately $0.68 per damaged share. After payment of the requested legal fees, expenses and Reimbursement Awards, the Settlement Fund would be approximately $0.31 per damaged share. Option traders should review the Plan of Distribution, set out in Exhibit B, for their personal recovery.

    Back To Top
  9. What Rights Are Being Compromised as Against the Class Action Settling Defendants?

    Unless you exclude yourself from a Settlement (see FAQ 10), you will remain in the Settlement Class for that Settlement. That means that you and all other Settling Class Members will release (agreeing never to sue, continue to sue, or be part of any other lawsuit) against that defendant as well as their current, former, or future affiliates for, among other things, any claims arising from or concerning your purchase, sale or ownership of Puda Securities.

    A complete description of the releases provided for in each of the Settlements, including the claims being released and the persons and entities who are being released, is set forth in the separate Stipulations of Settlement which are available on the Important Documents page.

    If you sign the Claim Form, you are agreeing to a release of the claims identified in the separate Stipulations of Settlement. That means you will accept a share in the Net Settlement Fund as sole compensation for any losses you have suffered in the acquisition and sale of Puda securities (supplemented only by any funds you may be entitled to receive from the Fair Fund).

    If a settlement is approved, the Class Action will be dismissed against the defendant(s) for all time.

    Back To Top
  10. How Do I Get Out of the Settlements Class?

    To exclude yourself from one or more of the Settlements, you must send a request for exclusion by mail to the Claims Administrator saying that you want to be excluded from one or more of the Settlements reached in In re Puda Coal Securities Inc. et al. Litigation. You must include:

    1. your name, address, telephone number;
    2. your Social Security Number or Taxpayer Identification Number;
    3. the number of Puda common shares, call options or put options purchased or otherwise acquired, or disposed of during the Settlement Class Period;
    4. the dates of each such purchase or acquisition of each Puda common share and the price or other consideration paid for each such share;
    5. the date of each such sale or other disposal of any Puda common shares (or put/call options) during the Settlement Class Period and the price or other consideration received for each such share; and
    6. the number of Puda shares held at the close of trading on December 7, 2010 (i.e., immediately before the commencement of the Class Period).

    You must state clearly that you are seeking to be excluded and identify the Settlement(s) for which you are seeking exclusion. Any request for exclusion must also be signed by the Person requesting exclusion. Your exclusion request must be received no later than May 13, 2016. Mail your request to both of the following:

    Macquarie Capital Fair Fund / Puda Coal Securities Litigation
    PO Box 2838
    Portland, OR 97208-2838
    Lionel Z. Glancy
    Glancy Prongay & Murray LLP
    1925 Century Park East, Ste. 2100
    Los Angeles, CA 90067

    You cannot exclude yourself by telephone or by e-mail. If you do not exclude yourself in the manner described above, you will be bound by all of the orders and judgments entered by the Court regarding the Settlements. You must exclude yourself even if you already have a pending case against the Underwriters or U.S. Directors based on the claims being released, if you wish to be able to continue that case.

    If you ask to be excluded from one or more of the Settlements, you will not be eligible to get any payment from that Settlement(s) and you cannot object to that Settlement(s) or the Class Action Plan of Allocation and/or the motion for an award of attorneys’ fees or reimbursement of litigation expenses in connection with that Settlement(s).

    Back To Top
  11. Do I Have a Lawyer in this Class Action?

    The Court has appointed the law firms The Rosen Law Firm P.A. and Glancy Prongay & Murray LLP as Plaintiffs’ Counsel to represent Plaintiffs and all other Settlement Class Members in the Class Action. If you have any questions about the proposed Class Action Settlements, you may contact Plaintiffs’ Counsel using the contact information at the end of the Joint Notice.

    If you want to be represented by your own lawyer, you may hire one at your own expense. Such counsel must file a notice of appearance on your behalf.

    Plaintiffs’ Counsel have not received any payment for their services in pursuing the claims asserted in the Class Action, nor been reimbursed for their out-of-pocket expenses. Lead Plaintiffs intend to request that the Court award Plaintiffs’ Counsel attorneys’ fees equal to one-third of the Settlement Fund, as well as reimbursement of up to $2.1 million of out-of-pocket litigation expenses.

    In addition, Lead Plaintiffs intend to ask the Court for an award for their work in prosecuting the Class Action in the amount of $7,500 each (the “Reimbursement Award”). Plaintiffs are also entitled to share in the proceeds of the Net Settlement Fund in the same manner as any other Class Member.

    The Court will determine whether these awards are warranted and the amount thereof. Any such payments will be paid out of the Settlement Fund.

    Back To Top
  12. Can I have more Information about the Hearing Regarding the Class Action Settlements?

    A hearing has been scheduled on the proposed Class Action Settlements for June 17, 2016 at 11:00 am, before the Honorable Denise Cote in the United States District Court for the Southern District of New York, United States Courthouse, 500 Pearl Street, New York, New York 10007 (the “Settlement Hearing”). At the Settlement Hearing, the Court will determine whether: (a) to grant final certification of the Settlement Class solely for purposes of the Settlements; (b) the Macquarie Settlement is fair, reasonable, and adequate; (c) the Brean Settlement is fair, reasonable and adequate; (d) the U.S. Directors Settlement is fair, reasonable and adequate; (e) to award Plaintiffs’ Counsel attorneys’ fees and reimbursement of litigation expenses; (f) the Plan of Allocation should be adopted; and/or (g) the Reimbursement Award to the Lead Plaintiffs should be granted. The Court can also consider any other matters that it may wish to address. If there are objections, the Court will consider them.

    The Court will consider the Brean Settlement, the Macquarie Settlement and the U.S. Directors Settlement independent of, and separately from, each other. Approval of any one or more Settlement is not contingent upon approval of any other Settlement. Thus, you can decide to exclude yourself from, or object to, one or two, or all three of the Settlements. However, the proposed Plan of Allocation is the same for each Settlement and a single application for attorneys’ fees and reimbursement of expenses to Plaintiffs’ Counsel has been filed covering all of the Settlements.

    If the Court approves one or more of the Settlements, payments to eligible claimants will be made after any appeals are resolved, and after completion of claims processing.

    Please note that the date of the Settlement Hearing is subject to change without further notice. If you plan to attend the hearing, you should check with Plaintiffs’ Counsel to be sure no change to the date and time of the Settlement Hearing has been made.

    The Court has the authority to make certain modifications to the Settlements and the Plan of Allocation without further notice to Class Members.

    Please check this website frequently for any updates.

    Back To Top
  13. How Do I Tell the Court That I Don’t Like One or All of the Class Action Settlements?

    If you are a Settlement Class Member and you do not exclude yourself, you can object to any of the Settlements, or any part of them, including the application for attorneys’ fees and for reimbursement of litigation expenses, and give reasons why you think the Court should not approve it. Objections must be in writing. To object, you must file a written objection with the Court saying that you object to the proposed Settlement(s), or the specific portion thereof to which you are objecting, in the case captioned, In re Puda Coal Securities, Inc. Litigation, No. 11cv2598 (S.D.N.Y.) (DLC).

    Your written objection must be sent to both the Court and to Plaintiffs’ Counsel and must be received by them no later than May 13, 2016:

    Clerk of the U.S. District Court for the
    Southern District of New York
    Daniel Patrick Moynihan United States Courthouse
    500 Pearl Street
    New York, NY 10007-1312
    Attn. In re Puda Coal Securities Litigation, 11cv2598
    Lionel Z. Glancy
    Glancy Prongay & Murray LLP
    1925 Century Park East, Ste. 2100
    Los Angeles, CA 90067
    Attn. In re Puda Coal Securities Litigation, 11cv2598

    Counsel for Lead Plaintiffs will forward your objection to the lawyers for the Settling Defendants.

    Any objection must include:

    1. the full name, address and telephone number of the objecting Settlement Class Member and identify the Settlement(s) to which you are objecting;
    2. a list and documentation of all of the Settlement Class Member’s transactions involving Puda common stock (or put/call options) during the Settlement Class Period;
    3. a written statement of all grounds for the objection;
    4. copies of any documents upon which the objection is based;
    5. a statement of whether you intend to appear at the Settlement Hearing;
    6. a list of other cases in which you or your counsel have appeared either as settlement objectors or as counsel for objectors in the preceding five years; and
    7. the objector’s signature, even if represented by counsel.

    If you intend to appear at the Settlement Hearing through counsel, the objection must also state the identity of all attorneys who will appear on your behalf at the Settlement Hearing.

    If you submit an objection, you are submitting yourself to the jurisdiction of the Court with respect to the subject matter of the Settlements, including, but not limited to, the releases that will be contained in the final judgments.

    Any member of the Settlement Class who does not object in the manner provided above will be deemed to have waived all objections.

    Back To Top
  14. Do I Have to Come to the Class Action Settlement Hearing?

    No. Class Action Plaintiffs’ Counsel will answer any questions the Court might have. But you are welcome to come at your own expense. If you send an objection, you do not have to come to the Court to talk about it. As long as you mailed your written objection so that it was received by the deadline, the Court will consider it when it considers whether to approve the Settlements.

    Back To Top
  15. Where can I get More Information About Either the Class Action Settlements or About the Fair Fund?

    The Joint Notice and this website contain only a summary of the proposed Fair Fund distribution and Class Action Settlements. The complete Fair Fund Distribution Plan and Fair Fund Plan of Allocation approved by the Court are available at the Important Documents page.

    The complete Settlements, including the scope of the claims being released by Class Members who do not opt-out of the Settlements, are set out in the separate Stipulations governing each of the Settlements. You may obtain copies of the Stipulations at the Important Documents page.

    You can also call the Claims Administrator toll free with questions about either the Fair Fund or the Class Action Settlements at 877-276-7324.

    Back To Top

Important Dates

For both the Fair Fund
and the Class Action:
  • May 13, 2016
    Claim Filing Deadline

For only the Class Action:
  • May 13, 2016
    Filing Deadline for requests for Exclusion
  • May 13, 2016
    Filing Deadline for Objections
  • June 17, 2016 at 11:00 a.m.
    The Settlement Hearing

For only the MSPC Settlement:
  • April 19, 2017
    Filing Deadline for requests for Exclusion
  • April 19, 2017
    Filing Deadline for Objections
  • May 10, 2017 at 10:30 am
    The Settlement Hearing