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22. LEGAL PROCEEDINGS | 12 Months Ended
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Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract] |
22. CONTINGENCY | Class Action The Company and certain of its officers and directors (Ming Yang, Xiaobin Liu, and Min Li, collectively, the “Individual Defendants”) were named as defendants in a putative securities class action lawsuit alleging violations of the federal securities laws. That action, captioned Lewy, et al. v. Gulf Resources, Inc., et al., No. 11-cv-3722 ODW (MRWx), was filed on April 29, 2011 in the United States District Court for the Central District of California. The lead plaintiffs, who sought to represent a class of all purchasers and acquirers of the Company’s common stock between March 16, 2009 and April 26, 2011 inclusive, filed an amended complaint on September 12, 2011 asserting claims for violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The amended complaint alleged that the defendants made false or misleading statements in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2008, 2009, and 2010, and in interim quarterly reports by, among other things, overstating revenue and net income and failing to disclose material related party transactions and certain facts about the CEO’s prior employment at another company. The amended complaint also asserted claims against the Individual Defendants for violations of Section 20(a) of the Securities Exchange Act of 1934. The amended complaint sought damages in an unspecified amount. The Company filed a motion to dismiss the amended complaint. On May 15, 2012, the Court denied the Company’s motion to dismiss the amended complaint. On April 30, 2013, the parties executed a stipulation and agreement of settlement (“Proposed Settlement”). On January 8, 2014, the Court entered an Order and Final Judgment approving the Proposed Settlement and dismissing the lawsuit, which was made final on February 9, 2014 after the appeal period ended. Under the term of the settlement, the class-action lawsuit will be dismissed in return for the payment of a total settlement amount of approximately of $2.0 million, which will not have any effect on the Company’s financial statements due to coverage under its directors’ and officers’ insurance.

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