According to the docket, on August 26, 1996, the Court entered the Order dismissing the plaintiff's amended complaint.
According to NuMed Home Health Care, Inc.'s SEC 10-QSB filing, in response to the complaint, the Company filed its answer and a corresponding motion to dismiss. On July 25, 1996, the United States District Court for the Middle District of Florida, Tampa Division, granted the Company's motion dismissing the complaint in its entirety. While the Court granted Plaintiff leave to amend the complaint, the Court indicated its concern for Plaintiff's ability to overcome the complaint's substantial deficiencies.
The complaint was filed alleging that the prospectus was false and misleading because it failed to disclose the lead underwriter's deteriorating financial condition and its inability to satisfy its minimum net capital requirements just prior to the offering. The Prospectus allegedly failed to disclose that a loan made to the underwriter just prior to the offering that allowed it to satisfy it net capital requirements was in fact made by one of the underwriter's officers. The prospectus also allegedly failed to disclose the extent of the conflicts of interest present between the issuer and underwriter. Defendant Jugal Taneja was both Chairman and CEO of NuMed (as well as its primary shareholder) and controlling shareholder of the underwriter. The complaint also alleges that the Prospectus failed to adequately disclose the potential risks of illiquidity in the trading of the stock which would occur if the underwriter was no longer able to make a market in the stock. When the underwriter in fact failed due to insufficient capital, trading in NuMed stock became illiquid and the stock price dropped significantly. Based on these allegations, the complaint asserts violations of sections 11 and 12(2) of the Securities Act of 1933.