On November 06, 2008, an order preliminarily approving settlement and providing for notice to determine whether the proposed settlement of the Litigation on the terms and conditions provided for in the Stipulation is fair, reasonable and adequate to the Class.
The lead underwriters in Pixelplus Co., Ltd.'s Initial Public Offering filed an objection to the settlement reached in a consolidated class action lawsuit against the company, according to the Picelplus Co.'s July 24, 2008 Form 20-F/A/ filing with the U.S. Securities and Exchange Commission for the period ended Dec. 31, 2007. On or about April 17, 2006, the company's chief executive officer, Seo Kyu Lee; its former chief financial officer, Moon Sung Kim; and its chief technology officer, Sang Soo Lee, were named as defendants in a purported shareholder class action lawsuit filed in the U.S. District Court for the Southern District of New York. The suit is styled Michael Y. Kim v. Seo Kyu Lee, et al., Case No. 06-CV-2951. The lawsuit alleges violations of the Securities Act and the Exchange Act during the period from Dec. 21, 2005, through April 11, 2006. The plaintiff's allegations concern the company's correction of revenue numbers for the fourth quarter of 2005 and fiscal year 2005 and the decision to consolidate the financial results of PTI. The plaintiff alleges that the company made false and misleading statements about these issues in its IPO documents and in other public statements and seeks unspecified damages.

On March 28, 2007 the judge granted motions to appoint lead plaintiff and approved the selection of lead counsel. A consolidated complaint was filed on June 25, 2007; defendants filed for dismissal on August 24, 2007.

According to a press release dated April 18, 2006, the Complaint charges that defendants violated the Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11 and 15 of the Securities Act of 1933 by issuing materially false and misleading financial information. The Complaint alleges that the during the Class Period, the Company reported materially false and misleading revenues for each reporting period in 2005. In particular, the Complaint alleges that the Company violated Generally Accepted Accounting Principles and the Federal Securities Laws, by failing to recognize sales to one of its affiliates, PTI, on a consolidated basis and recognizing sales that were uncollectible, which resulted in the Company overstating its revenues for 2005.

The complaint further alleges that on or around April 11, 2006, the Company shocked the market when it announced, among other things, that its financial statements for 2005 should no longer be relied upon because the Company improperly recognized sales to PTI because the Company failed to consolidate PTI's results and accounted for sales that had uncertain collectibility. The Company admitted that it controls PTI as it has the ability to elect two-thirds of PTI's Board. As a result, the Company announced that revenues would be reduced by approximately $3.6 million and $2.5 million, for the fourth quarter of 2005 and fiscal year 2005, respectively. Following these adverse disclosures, the Company's stock price dropped nearly 37.2%.

The class action lawsuit has been filed on behalf of all purchasers of Pixelplus American Depositary Shares during the class period, including purchasers in the Company's Initial Public Offering.