Diana Containerships Inc (NASDAQ:DCIX) seems to be back in business.Within the last few days, its value has jumped from $2.5 to over $25, meaning early investors have been able to walk away with returns of over 900% on the stock.However, news of a class action against the firm consisting of investors who purchased or otherwise acquired Diana securities, seeking to recover compensable damages caused by defendants' violations of the Securities Exchange Act has threatened to force the stock back into a decline.Take a look at the price action: DCIX One Month ChartBack in July 2017, its price plummeted towards a record low in within the week, after the provider of shipping transport services said it will effect a 1-for-6 reverse stock split. The split would be the second reverse split within the month, after a 1-for-7 split has only just been put into effect. The stock recently traded at $0.32 ahead of the open, which was below the previous record low close of $0.45 cents.Company ProfileBefore we go into the details, here is brief profile of the companyDiana Containerships Inc. is a holding company. It was formed in January 2010 and is headquartered in Athens, Greece. The company, through its subsidiaries, is a provider of shipping transportation services, it engages in the seaborne transportation industry through the ownership of containerships and operates its fleet through Unitized Ocean Transport Limited, a wholly-owned subsidiary while also focusing on containership acquisition opportunities and the chartering of its vessels.As of December 2016, the Company's fleet consisted of six panamax and six post-panamax containerships with a combined carrying capacity of 61,517 twenty-foot equivalent unit (TEU). At the time, its fleet included Sagitta, Centaurus, New Jersey, Pamina, Domingo, Doukato, Puelo, Pucon, March, Great And Hamburg. Some of its customers include national, regional and international companies. The firm charters its vessels to customers primarily pursuant to short-term and long-term time charters. As at December, 2016, its subsidiaries included Likiep Shipping Company Inc., Orangina Inc., Rongerik Shipping Company Inc., Dud Shipping Company Inc., Mago Shipping Company Inc., Eluk Shipping Company Inc., Oruk Shipping Company Inc., Meck Shipping Company Inc., Langor Shipping Company Inc. and Unitized Ocean Transport Limited.Recent DevelopmentsAt the end of October 2017, Diana Containerships, Inc and two of its officers were accused of federal securities law violations in a class action lawsuit filed on behalf of purchasers of Diana common stock during the period between January 26, 2017 and October 3, 2017 .The lawsuit also named as defendants Kalani Investments Limited and Marc Bistricher. The action was filed in the Eastern District of New York and is captioned Robinson v. Diana Containerships Inc.The complaint alleged that throughout the Period, the defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, the defendants made false and/or misleading statements and/or failed to disclose that:(a) through his control of Diana, SymeonPalios (Caharman and CEO of Diana Containerships Inc) caused Diana to sell its common shares and securities convertible into common shares to Kalani Investments Limited at a significant discount to market price and to file registration statements so that Kalani could resell these shares into the market;(b) when Kalani's sales of Diana stock caused the price of Diana stock to decline, the Company would reverse split the stock, causing a certain number of outstanding shares to be merged into a single share, and thereby raise the price of Diana stock;(c) then Diana would again sell securities to Kalani and the same pattern of transactions would ensue(d) Defendants failed to disclose the true purpose of the transactions and related stock issuances and reverses, to provide Diana with financing that benefited Palios and his related companies and family members and otherwise funnel money to Company insiders; and(e) as a result of the foregoing, Diana's public statements were materially false and misleading at all relevant times.Just few weeks, as a result of defendants' ongoing dilutive and manipulative conduct, the price of Diana Containerships’ common stock had declined to close at $0.47 per share on an unadjusted basis. At this share price, Diana had a market capitalization of less than one million dollars, despite having raised millions of dollars from investors since January 2017.Financial InformationFor the first quarter which ended in March 2017, the company recorded revenues of $3.78 million, but net loss of $7.39 million.The change in revenue for the period compared to the same period last year of -71.96% is almost the same as its change in earnings, and is about average among the announced results within the industry, suggesting that Diana Containerships Inc is holding onto its market share. Also, for comparison purposes, revenues changed by -31.96% and earnings by 12.60% compared to the immediate last period.The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from -12.62% to -102.86%, as well as issues with cost controls. As a result, operating margin (EBITDA margin) went from 12.69% to -93.48% in this time frame. For comparison, gross margins dropped by 44.92% and EBITDA margins by 38.55% in the previous period.ConclusionWhile it is never advisable to buy or sell any stock due to panic, the level of accusations against the firm make it difficult to find any positives in the near term. We believe the latest rally was just a short squeeze resulting in a short covering rally. Once the volume dies down, we expect the shorts to attack again in full force and push the stock price down. Traders should trade accordingly.We will be updating our subscribers as soon as we know more. For the latest updates on DCIX, sign up below!Disclosure: We have no position in DCIX and have not been compensated for this article.