According to the Company’s FORM 10-Q For The Quarterly Period Ended February 29, 2000, on July 19, 1999, the Company, the Company's former President and Chief Executive Officer and Mego Financial filed motions to dismiss the second amended and redrafted complaint. On March 9, 2000, the court granted the motions and dismissed the case with prejudice.
As previously reported by the same SEC filing, on June 30, 1998, the plaintiff amended the complaint to add additional plaintiffs, to add as a defendant Mego Financial, the Company's former parent, and to extend the class period through and including May 20, 1998. On September 18, 1998, the Company, the Company's former President and Chief Executive Officer and Mego Financial filed motions to dismiss the complaint. On April 8, 1999, the court granted each of these motions. In the court's order dismissing the complaint, the plaintiffs were permitted, upon proper motions, to serve and file a second amended and redrafted complaint within 30 days. On May 10, 1999, the Plaintiffs moved for leave to file and serve the second amended and redrafted complaint contemplated in the earlier order. The court granted Plaintiffs' motion and accepted the second amended complaint on June 8, 1999.
The original complaint charges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. According to the Complaint, the defendants engaged in a scheme to inflate artificially the market price of Mego Mortgage common stock and to defraud purchasers of Mego Mortgage common stock by, inter alia, making misrepresentations and omissions of material fact concerning Mego Mortgage's financial condition, operations and growth prospects during the Class Period. The Complaint alleges, among other things, that Mego Mortgage inflated the value of the mortgage related securities carried on its financial statements.