Case5:11-cv-05235-RMW Documentl05 FiIed04/23/12 Pagel of 100 1 BARRACK RODOS & BACINE STEPHEN R BASSER (121590) 2 SAMUEL M. WARD (216562) 600 West Broadway, Suite 900 3 San Diego, CA 92101 Telephone: (619) 230-0800 4 Facsimile: (619) 230-1874 S BRAN STETrER, STRANCH & JENNINGS, PLLC 6 J. Gerard Stmnch, W 7 James G. Stmnch, ifi 227 Second Avenue North, Fourth Floor 8 Nashville, TN 37201-1631 Telephone: (615) 254-8801 9 Facsimile: (615) 250-3937 10 Co-Lead Counsel for Lead Plaintiffs Oakland County Employees'Retirement System, 11 Laborers'District Council Contractors'Pension Fund of Ohio, and Woburn Retirement System and the Proposed Class 12 [Additional counsel appear on signature page] 13 14 UNITED STATES DISTRICT' COURT 15 NORTHERN DISTRICT' OF CALWORNIA 16 SAN JOSE DIVISION 17 In re OMNIVISION TECHNOLOGIES, Case No.: 5:11-cv-05235-RMW 18 INC. LITIGATION LEAD PLAINTIFFS' CONSOLIDATED 19 CLASS ACTION COMPLAINT This Document Relates to: 20 ALL ACTIONS. 21 22 23 24 25 26 27 28 LEAD PLTFS' CONS. CLASS ACHON COMPLAINT F1 Case No.: 5:11-cv-05235-RMW Case5:11-cv-05235-RMW Document105 FiIed04/23/12 Page2 of 100 TABLE OF CONTENTS 2 IINTRODUCTION.....................................................................................................................1 3 I JURISDICTION AND VENUE...............................................................................................12 4 IPARTIES................................................................................................................................13 S I FRAUDULENT SCHEME AND COURSE OF BUSINESS...................................................14 6 IBACKGROUND.....................................................................................................................15 7 OVTI's Business ..........................................................................................................15 8 OVTI's Exclusive Supply of Apple iPhone Image Sensors Aiding its Rebound from the Global Economic Crisis of 2008.............................................................................15 9 Prior to the Class Period, Defendants Saturate the Maiket with Statements of its 10 Technological Lead F1 A Competitive Differentiator F1 Achieving its Momentum and Success, Signaling OVTI's Exclusive Position with its High-Profile, Premium 11 Customer F1 Apple......................................................................................................16 12 Sony Dislodges OVTI from its Exclusive, Dominant Position and Incumbency Regardingthe Apple iPhone.........................................................................................19 13 OVTI's Public Statements Prevent the April 13, 2010 Rodman & Renshaw Report Re 14 Sony from Credibly Impacting the Market ................................................................... 21 15 FALSE, DECEPTIVE AND MISLEADING STATEMENTS AND MATERIAL OMISSIONS DURING THE CLASS PERIOD.............................................................................................25 16 TheAugust 2010 Statements........................................................................................25 17 TheSeptember 2010 Statements...................................................................................27 18 TheNovember 2010 Statements...................................................................................29 19 TheJanuary 2011 Statements.......................................................................................31 20 TheFebruary 2011 Statements.....................................................................................32 21 TheMarch 2011 Statements.........................................................................................35 22 The Sony CEO April Fools' Day Interview Does not Credibility Impact the Market ..... 36 23 TheMay 2011 Statements............................................................................................38 24 TheJune 2011 Statements............................................................................................41 25 THE WHOLE TRUTH SLOWLY EMERGES OVER TIME CAUSING OVTTS STOCK 26 PRICE DECLINE AND INVESTORS' LOSSES.....................................................................44 27 July 2011 Sony Rumor F1 and Defendants' Continuing False and Deceptive Statements and Maiket Distortion Until August 25, 2011...............................................................44 28 LEAD PLTFS' CONS. CLASS ACHON COMPLAINT F1 Case No.: 5:11-cv-05235-RMW Case5:11-cv-05235-RMW Document105 FiIed04/23/12 Page3 of 100 Defendants' Disappointing Guidance Given on August 25, 2011 for F2Q12 Ending October 31, 2011 F1 A Partial Disclosure F1 and Their Continuing Deception and 2 MarketDistortion ......................................................................................................... 48 3 September 2011 Partial Disclosure and Defendants' Further False and Deceptive Statements, Material Omissions and Continuing Maitet Distortion Through October 13, 4 2011.............................................................................................................................56 S The October 14, 2011 Chipworks Tear-Down and Partial Corrective Disclosure ..........60 The November 7, 2011 Corrective Disclosure and Analysts' Frustration with Defendants' 6 Lack of Credibility, Transparency and Evasion............................................................62 7 I ALLEGATIONS SUPPORTING SCIENTER.........................................................................66 8 Suspicious Insider Selling in Amounts Dramatically Out of Line with Prior Trading History Demonstrate a Strong Inference of Scienter.....................................................66 9 Facts and Circumstances Giving Rise to a Presumption and Strong Inference of 10 Scienter ........................................................................................................................ 73 11 CoreBusiness Matter...................................................................................................77 12 "Hands-On" "Detail Oriented" Management and Confinnatoiy Admissions of Working Closelywith Key Customers .......................................................................................77 13 Apple was a Key, Critically Important Customer and Apple's 2011 iPhone was a Key 14 Contract......................................................................................................................79 15 OVTI's iPhone Supply Position was Highly Important to its Investors and CEO Hong closely Monitored OVTI's Investor Communications..................................................82 16 Apple iPhone Design to Launch Cycle........................................................................83 17 The2011 iPhone 4S..........................................................................................79 18 2010 iPhone 4 ................................................................................................... 86 19 Additional Basis for Scienter Acconling to Reliable Confidential Sources ...................86 20 LOSSCAUSATION ...............................................................................................................87 21 NOSAFE HARBOR...............................................................................................................87 22 APPLICABILITY OF PRESUMPTION OF RELIANCE UNDER THE AFFILIATED UTE 23 DOCTRINE OR IN THE ALTERNATIVE, THE FRAUD ON THE MARKET DOCTRINE .88 24 CLASS ACTION ALLEGATIONS.........................................................................................89 25 COUNT Wor Violation of Section 10(b) of the Exchange Act and Rule lOb-S Against All Defendants..............................................................................................................................90 26 27 COUNT IT For Violation of § 20(a) of the Exchange Act Against the Individual Defendants ... 91 28 LEAD PLTFS' CONS. CLASS ACHON COMPLAINT F1 Case No.: 5:11-cv-05235-RMW Case5:11-cv-05235-RMW Documentl05 FiIed04/23/12 Page4 of 100 1 PRAYER FOR RELIEF ..........................................................................................................91 2 JURYDEMAND ....................................................................................................................91 3 4 S 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LEAD PLTFS' CONS. CLASS ACHON COMPLAINT F1 Case No.: 5:11-cv-05235-RMW Case5:11-cv-05235-RMW Document105 FiIed04/23/12 Page5 of 100 1 Lead Plaintiffs Oakland County Employees Retirement System, Laborers' District 2 Council Contractors' Pension Fund of Ohio, and Woburn Retirement System (the Institutional 3 Investors Group or "Lead Plaintiffs'), make the following allegations based upon the 4 investigation of Lead Plaintiffs' counsel, which included a review of U.S. Securities and Exchange Commission ("SEC') filings by OnmiVision Technologies, Inc. ("OmniVision," 5 "OVIl" or the "Company'), as well as regulatoiy filings and reports, securities analysts' 6 reports and advisories about the Company, press releases and other public statements issued by 7 the Company, media reports about the Company interviews with confidential witnesses as 8 noted below and relevant expert input and consultation. Lead Plaintiffs believe that substantial 9 additional evidentiary support will exist for the allegations set forth herein after a reasonable 10 opportunity for discovery. INTRODUCTION 11 1. This is a federal securities class action