On June 20, 2000, the Court entered the Order by U.S. District Judge Joe Kendall approving the Plan of Allocation of Settlement Proceeds and granting the motion for final approval of the settlement. The Court also entered the Order and Final Judgment. The Plaintiffs’ Counsel was awarded $1,050,000 as attorneys' fees and $67,044.55 in reimbursed expenses, plus interest earned on such fees and expenses as outlined in the Stipulation.
The original complaint charges Monarch and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, the defendants stated that Monarch continued to make strategic acquisitions of quality practices and experience solid internal growth as its business fundamentals remained strong and would successfully execute its growth plans for 1998 and beyond as they were pleased with Monarch's financial performance and confident that Monarch would earn $0.58 in 1998. These statements caused the price of Monarch's common stock to increase to its Class Period high of nearly $20 per share and permitted the defendants to use Monarch's artificially inflated stock as a currency to acquire numerous dental practices and permit Monarch's venture capital investor to distribute one million Monarch shares to the limited partners of the various entities it controlled who could then sell Monarch shares before they collapsed in price. However, internally at Monarch, the defendants knew that Monarch's business fundamentals were anything but strong, as Monarch had acquired low quality practices, three of its Houston offices were running cash flow negative and its infrastructure was insufficient to competently manage or synthesize the numerous practices it had acquired and that, because of these and other
negative factors, Monarch would badly miss its earnings projections of $0.18
and $0.58 for the fourth quarter and year 1998 respectively. When the defendants revealed to the securities markets on December 22, 1998 and March 11, 1999 that Monarch would post a huge $0.38 loss in the fourth quarter as a result of $7.7 million in charges that would nearly wipe out all of Monarch's earnings for the entire year 1998, the price of Monarch stock collapsed and traded below $3 per share, approximately 90% below its Class Period highs.