China Life also acknowledged that the pending IPO price of its American depositary shares, each worth 40 "H" shares--shares offered in Hong Kong--was greater than book value. In the F-1 statement, the insurer placed its book value at $9.32 a share, while estimating its IPO price in the range of $15.35 to $18.80.
Milberg Weiss noted that China Life's IPO was over-subscribed by about 25 times, following a "road show" in New York City just before the IPO. The law firm said the interest in the stock was "the sort of frenzy that was reminiscent of the Internet bubble." According to the firm's lawsuit, China Life and certain of its officers engaged in a "massive financial fraud" amounting to $652 million before the company's conversion to its current form in June 2003.
The law firm charged that China Life reformed last year "to cherry-pick healthier policies from its parent company," and that the predecessor company "engaged in criminal acts involving illegal agent services, illegal premium payments, embezzlement and depositing monies in illegal bank accounts." The predecessor company, now under a new name--China Life Insurance (Group) Co. (CLIC)--controls the listed company, Milberg Weiss said in a statement. The law firm also charges that the National Audit Office of China was preparing to publish adverse audit findings on the predecessor company as the IPO was launched.