China TechFaith Wireless Communication Technology Limited (CNTF) Accused of Misrepresenting the Sale of Its Subsidiary

According to the complaint against the company's officers and directors for alleged violations of the Securities Exchange Act of 1934 between July 12, 2018 and December 19, 2018, China TechFaith Wireless Communication Technology Limited (CNTF) revealed to investors that its subsidiary, TechFaith Wireless Technology Group Limited, would sell its 100% ownership in its wholly-owned subsidiary, Charm Faith Limited, for RMB710 million. China TechFaith further represented that the company would use the proceeds from the sale for further development of its ruggedized smart devices business and the reinvestment into new office space development opportunities. However, the agreement was not as lucrative as the company led investors to believe. On December 20, 2018, China TechFaith revealed that operating expenses for the first half of 2018 more than quintupled as compared to the same period last year, and as a result of the lower transaction valuation of the sale of its subsidiary, the company recognized an impairment loss of $62.2 million. On this news, China TechFaith's stock plummeted over 35% to close at $1.07 per share on December 20, 2018.

China TechFaith Wireless Communication Technology Limited (CNTF) Shareholders Have Legal Options

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