According to the firm's 10-Q filing dated 8/16/1999, between August 27, 1997 and October 24, 1997, four actions were filed against the Company, the current Chairman of the Board of Directors and formerly an officer of the Company, and another former officer of the Company. These actions were consolidated into a single
action, alleging violations of Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated there under, as well as claims against the individual defendants for alleged "controlling person" liability under Section 20(a) of the Securities Exchange Act. On December 24, 1998, the Company and the individual defendants entered into an agreement in principle to settle the consolidated class action lawsuits for the payment of $11 million to the plaintiffs. On August 11, 1999, U.S. District Court Judge Avern Cohn of the Eastern District of Michigan granted final approval of the Stipulation of Settlement formalizing the agreement in principle.
The original Complaint alleges that during the Class Period, TechTeam and certain of its directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making misrepresentations and omissions of material fact about the Company's financial condition and operations. Among other things, the Complaint claims that the defendants caused TechTeam to overstate materially its revenues and income in the first quarter of 1997 by recognizing revenue on an accelerated basis on a purported contract to license software.