iPass, Inc. Conclusion: According to a press release dated September 12, 2006, iPass, Inc. (NASDAQ: IPAS), a global provider of services that unify the management of remote and mobile connectivity and devices, today announced that a federal class action against the Company has been dismissed with prejudice. The case, In re iPass, Inc. Securities Litigation, No. C 05-00228 MHP, was pending in the U.S. District Court in San Francisco, and involved allegations that the company and several of its officers and directors had violated the federal securities laws. In a ruling issued on September 6, 2006, Judge Marilyn Hall Patel of the U.S. District Court in San Francisco found that the complaint fell short of the requirements for setting forth a claim under the federal securities laws. The court entered a final judgment on September 7, 2006. The effect of this order is to terminate the federal class action litigation. The plaintiffs have until October 10, 2006 to appeal the ruling to the Ninth U.S. Circuit Court of Appeals.
On February 28, 2006, the Honorable Judge Marilyn Hall Patel granted defendants’ motion to dismiss plaintiffs’ Consolidated Amended Complaint without prejudice. Plaintiffs are required to file an amended complaint within thirty days. Plaintiffs filed a Second Consolidated Amended Complaint on March 30, 2006.
The original class action lawsuit was filed on behalf of purchasers of the securities of iPass, Inc., to pursue remedies under the Securities Exchange Act of 1934. The complaint alleges that at all relevant times, iPass purported to provide "simple, secure and manageable connectivity services" by connecting mobile workers' computers to the Web through partnerships with local Internet service providers using "narrowband" telephone dial-up access. With high-speed broadband access to the Internet getting cheaper and more common among consumers, it was vitally important to iPass that it make the transition from "narrow band" dial-up service to broadband service, and that the transition be executed properly.
More specifically, this complaint alleges that defendants failed to disclose a major operational snafu that occurred in connection with defendants' attempt to expand the Company's broadband service offerings and that this snafu, which hindered access to the iPass service, resulted in the loss of a material number of customers, and a concomitant decline in the Company's revenue, earnings, and growth prospects. Before investors found out about the snafu, and its effect on iPass's business, Company insiders, who knew of the snafu and its materially adverse effects on the Company's business but did not let on, sold more than 170,000 shares of their personally held iPass securities at prices within a one-week period between $10.94 to $12.16 for proceeds well in excess of $2 million. Upon disclosure of the snafu, on June 30, 2004, iPass shares fell to $6.91.
SIC Code: 7374
Industry: Software & Programming
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