Derivative Suit Against Chinese Gaming Co.

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If you had laid out this fact pattern as a future scenario to someone ten years ago, they would have laughed in your face:

Giant Interactive Group Inc. (”Giant”), an online game developer in China, has become the target of a class action lawsuit filed in the U.S. District Court for the Southern District of New York. The suit alleges that Giant lost subscribers after curbing gold farming activity in its popular “ZT Online” (aka “Zheng Tu Online”) title, and failed to tell investors of the decline.

Amazing. That any company would face a derivative action for putting the brakes on gold farming is a very interesting sign of how important this sector has become. These guys are making so much money now that the plaintiff’s bar is going after them.

Now throw into the mix the fact that the company is Chinese and it just recently listed on the NYSE, and you’ve got a heck of a story here.

You can add this kind of nonsense to the list of things, such as Sarbanes-Oxley, that make the U.S. a challenging jurisdiction in which to list.

It also almost goes without saying that as these kinds of cross-border legal issues become more common, international service providers like my employer, DLA Piper, should benefit quite a lot. Not with a case like this one, however.

Note: this is not exactly breaking news and is at least a month old. I’m still cleaning out my Inbox from the holidays.