Xethanol Corporation - Securities Class Action

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Copyright (c) 2001
Stanford Law School

Xethanol Corporation Summary: According to a press release dated October 08, 2008, Xethanol Corporation (AMEX: XNL), a renewable energy company, announces that on October 6, 2008, the United States District Court for the Southern District of New York approved the settlement agreement negotiated between Xethanol and a class of plaintiff shareholders who had sued the company on October 24, 2006. The Final Approval Order also dismisses the action, which is now concluded. The settlement agreement was reached on November 28, 2007 during a mediation overseen by a retired United States District Court Judge in West Palm Beach, Florida, and attended by counsel for plaintiffs, counsel for the company and the individual defendants and counsel for the company’s insurance carriers.

On February 7, 2007, the Court entered the Order consolidating several actions under In Re Xethanol Corporation Securities Litigation, 06cv10234. On March 15, 2007, the Court entered the Order appointing the Counsell Group as Lead Plaintiffs and appointing Kahn Gauthier Swick is appointed class counsel. On March 27, 2007, the plaintiffs filed an Amended and Consolidated Class Action Complaint, and the defendants responded by filing a motion to dismiss the Amended and Consolidated Class Action Complaint. On September 7, 2007, Judge Harold Baer denied defendants’ motion to dismiss. On April 29, 2008, a Motion for Settlement Preliminary Approval, filed by The Counsell Group. According the notice of settlement, dated May 29, 2008, a $2,800,000 cash Settlement was proposed. On May 16, 2008, the judge granted the motion for Preliminary Approval of Settlement. The Court certified the Class solely for purposes of this Settlement. A hearing was set on the matter.

The original complaint charges Xethanol and certain of its officers and directors with violations of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. Throughout the Class Period, Xethanol repeatedly assured investors that it could sustain itself on revenue from corn ethanol production while successfully commercializing biomass ethanol production. In fact, however, as investors have now learned, Xethanol was suffering from a host of undisclosed adverse factors that negatively impacted its business and it appears that they do not have the ability to commercialize biomass ethanol in the foreseeable near term. As investors learned the truth about Xethanol, shares of the Company declined precipitously -- falling from a Class Period high of over $15 per share in April 2006, to less than $4.00 per share by the end of the Class Period. While shares of Xethanol were artificially inflated during the Class Period, certain insiders were able to liquidate millions of dollars of their personally held Xethanol shares.

Particularly, the complaint alleges that Xethanol: (1) misrepresented management's experience and standard of ethics; (2) omitted disclosing a series of related party transactions and association with investors who had alarming records of stock fraud and related shareholder abuses; (3) materially overstated the Company's profitability by under-reporting the true costs associated with completing a biomass to ethanol production facility, and by failing to make proper adjustments to the Company's financial reports; (4) lacked any reasonable basis to assert that the Company was operating according to plan or could achieve the near-term commercialization of biomass ethanol production, or achieve the guidance sponsored and/or endorsed by the Company; and (5) caused plaintiffs and other Class members to purchase Xethanol common stock at artificially inflated prices.

INDUSTRY CLASSIFICATION:
SIC Code: 3250
Sector: Services
Industry: Waste Management Services

COMPANY/ISSUER NAME:	Xethanol Corporation
COMPANY/ISSUER TICKER:	XNL
COMPANY WEBSITE:	http://www.xethanol.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Milton Ariail, et al. v. Xethanol Corporation, et al.

COURT: S.D. New York	DOCKET NUMBER: 06-CV-10234
JUDGE NAME: Hon. Harold Baer
DATE FILED: 10/23/2006	SOURCE: Notice of Filing
CLASS PERIOD START: 01/31/2006	CLASS PERIOD END: 08/08/2006
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Kahn Gauthier Swick, LLC (New Orleans) 650 Poydras St. Suite 2150, New Orleans, LA, 70130 (voice) (504) 455-1400, (fax) , lewis.kahn@kglg.com Murray, Frank & Sailer LLP 275 Madison Ave 34th Flr, New York, NY, 10016 (voice) 212.682.1818, (fax) 212.682.1892, email@murrayfrank.com Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com Scott & Scott LLC (Connecticut) P.O. Box 192, 108 Norwich Avenue, Colchester, CT, 06415 (voice) 860.537.5537, (fax) 860.537.4432, scottlaw@scott-scott.com Shalov Stone & Bonner LLP (New York) 485 Seventh Avenue, Suite 1000, New York, NY, 10018 (voice) 212.239.4340, (fax) 212.239.4310, lawyer@lawssb.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of Federal Securities Laws - Jury Trial Demanded
Type: Complaint		Date on the document: 10/23/2006
Order
Type: Order		Date on the document: 03/14/2007

REFERENCE COMPLAINT

In Re: Xethanol Corporation Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 06-CV-10234
JUDGE NAME: Hon. Harold Baer
DATE FILED: 03/27/2007	SOURCE: Docket
CLASS PERIOD START: 01/31/2006	CLASS PERIOD END: 08/08/2006
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Kahn Gauthier Swick, LLC (New Orleans) 650 Poydras St. Suite 2150, New Orleans, LA, 70130 (voice) (504) 455-1400, (fax) , lewis.kahn@kglg.com Kahn Gauthier Swick, LLC (NY) 12 East 41st Street, 12th Floor, New York, NY, 10016 (voice) 212.920.4310, (fax) 212.696.3730, info@kglg.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
Amended Consolidated Class Action Complaint For Violations Of Federal Securities Laws
Type: Complaint		Date on the document: 3/27/2007
Lead Plaintiffs' Motion For Preliminary Approval Of Settlement; Directing Notice Of Pendency And Settlement Of Class Action; And Setting Hearing Date For Final Approval Of Settlement And For Certification Of Settlement Class
Type: Motion		Date on the document: 4/29/2008
Notice Of Pendency Of Class Action And Proposed Settlement With All Defendants. Motion For Attorneys' Fees And Settlement Fairness Hearing
Type: Notice		Date on the document: 5/29/2008
Final Order And Judgment Of Dismissal With Prejudice Of Class Action, Approval Of The Plan Of Allocation, And Award Of Plaintiffs' Counsel's Attorneys' Fees And Reimbursement Of Litigation Expenses
Type: Order		Date on the document: 10/06/2008
U.S. District Court Civil Docket
Type: Docket		Date on the document: 10/06/2008
Notice of Motion and Motion of Order Approving Distribution of Net Settlement Fund
Type: Notice		Date on the document: 08/21/2009
Order Approving Distribution of Net Settlement Fund
Type: Order		Date on the document: 08/31/2009

OTHER DOCUMENTS
Class Action Complaint - Jury Trial Demanded
Case Name and/or Number: Joseph Spoto, et al. v. Xethanol Corporation, et al.
Type: Complaint		Date on the document: 10/31/2006
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Cheryl Difruscio, et al. v. Xethanol Corporation, et al.
Type: Complaint		Date on the document: 10/31/2006
Class Action Complaint for Violations of Federal Securities Laws - Jury Trial Demanded
Case Name and/or Number: Chad Jones, et al. v. Xethanol Corporation, et al.
Type: Complaint		Date on the document: 11/10/2006

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