On June 1, 2018, Labaton Keller Sucharow was appointed Lead Counsel in a securities fraud action against Shanda Games Limited (Shanda or the Company), Yingfeng Zhang, Li Yao, Lijun Lin, Heng Wing Chan, Yong Gui, Shaolin Liang, and Danian Chen (collectively, Defendants).  The action alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act) and SEC Rule 10b-5 promulgated thereunder on behalf of all persons and entities who held Shanda Securities on April 3, 2015, and who sold those Shanda Securities during the period from April 3, 2015 through November 18, 2015.

Shanda develops and operates video games that are either played on computers or mobile devices.  Despite operating an extensive catalogue of games, Shanda was heavily dependent on just a few titles for the vast majority of its revenue.

Defendants are accused of engaging in a scheme to depress the value of Shanda’s stock and American Depositary Shares in order to avoid paying a fair price to Shanda’s shareholders during a management-led go-private transaction.  Defendants perpetrated the scheme by allegedly publishing misleading financial projections that dramatically underreported projected revenue for the Company’s most profitable game.  A Cayman Islands appraisal court would later find that shareholders had been paid only 55.2% of the fair value of their securities in the go-private transaction.

Plaintiffs filed an Amended Complaint in August 2018, and Defendants moved to dismiss shortly thereafter.  The Southern District of New York granted Defendants’ motion on the grounds that Plaintiffs were unable to establish reliance.  However, Plaintiffs moved for reconsideration of the dismissal order, which the District Court granted.

Plaintiffs then filed at Second Amended Complaint in October 2020.  The District Court dismissed the core claims on the grounds that Plaintiffs had failed to plead loss causation.  However, Plaintiffs sought immediate appellate review of the dismissal.  In February 2025, the Second Circuit Court of Appeals reversed the District Court’s order.  The Second Circuit decisively found that Plaintiffs had adequately pled loss causation.

The Parties reached an agreement to settle the matter in 2026.  This settlement is only possible due to years of hard-fought litigation.

The case is In re Shanda Games Limited Securities Litigation, No. 1:18-CV-02463-ALC (S.D.N.Y.).  Labaton Keller Sucharow represents Lead Plaintiff David Monk and proposed additional named Plaintiffs Altimeo Asset Management, MW Gestion, and MW Optimum.