An investor in ShengdaTech filed a lawsuit against ShengdaTech over alleged securities laws violation only on behalf of those who purchased shares of ShengdaTech, Inc. between March 15, 2010 and March 15, 2011. Meanwhile an investigation on behalf of current long term investors in shares of ShengdaTech, Inc. (NASDAQ:SDTH) including those who purchased (also) prior to March 15, 2010 and presently continue to hold those shares was announced.

The investigation by a law firm on behalf of current long term investors in stocks of ShengdaTech, Inc. (NASDAQ:SDTH) concerns whether certain current and/or former members of ShengdaTechs board of directors and certain executive officers can be held liable in connection with the alleged Securities Laws violations in the lawsuit filed by investors who purchased SDTH shares only between March 15, 2010 and March 15, 2011.
According to this complaint filed in the United States District Court for the Southern District of New York the plaintiff alleges that ShengdaTech Inc violated the Securities Exchange Act of 1934 by issuing between March 15, 2010 and March 15, 2011 materially false and misleading statements regarding its business and prospects.

ShengdaTechs 12months Total Revenue increased from $72.60million in 2006 to $102.12million in 2009. Its Net Income went from $17.53million in 2006 to $23.10million in 2009. For the first three quarters in 2010 ShengdaTech, Inc. reported a combined nine months Total Revenue of $97.89million with a combined nine months Net Income of $20.65million.

Shares of ShengdaTech, Inc. traded during 2007 as high as $14.34 per share and fell during 2009 to as low as $2.97 per share. Since then SDTH shares were able to gain value und traded as recently as October, November, and December 2010 over $6 per share. SDTH shares fell sharp from $6.12 on Dec 8 to $4.67 on Dec 17 and continued to decrease to as low as $4.02 per share on Feb 9. SDTH shares then increased to $4.38 on Feb 16. However, on March 15 the NASDAQ Stock Market (Nasdaq:NDAQ) announced that the trading halt status in ShengdaTech, Inc. (Nasdaq:SDTH) was changed to 'additional information requested' from the company. Trading in the company's stock had been halted on March 15, 2011 at 7:55:20 a.m. Eastern Time for 'news pending' at a last sale price of $3.551. Trading will remain halted until ShengdaTech, Inc. has fully satisfied NASDAQ's request for additional information. The same day ShengdaTech, Inc. (Nasdaq: SDTH), announced that it had appointed a special committee of the Board of Directors to investigate potentially serious discrepancies and unexplained issues relating to the Company and its subsidiaries' financial records identified by the Company's auditors in the course of their audit of the consolidated financial statements for the fiscal year ended December 31, 2010.
ShengdaTech, Inc. also said that due to the pendency of the internal investigation, ShengdaTech will not be able to file its Annual Report on Form 10-K in a timely manner.