The shares of Gulf Resources, Inc. (NASDAQ:GURE) fell during morning trading on Friday, as news that a lawsuit against the company was moving forward shifted investor sentiment away from the Chinese firm.
Business Insider reported that the class-action suit against the Shandong-based company survived a motion to dismiss on May 21 and the micro cap stock for Gulf Resources fell following the decision.
According to the news outlet, a federal judge advanced the claims that the Chinese firm allegedly violated securities laws and tricked investors with fake accounting figures.
"Taking these allegations as true, the court finds that plaintiffs have adequately pleaded falsity," U.S. District Judge Otis Wright wrote in his decision. The suit claims that Gulf Resources kept two separate accounting books for Chinese state reporting and U.S. government filings, according to Courthouse News Service.
The discrepancies in the data have been outlined by the lawsuit and the company could endure a lengthy trial after the lawsuit from its investors moved forward.
Shares of Gulf Resources fell $0.08 to $1.57, a decrease of 4.8 percent per share.