According to the docket, on June 5, 2000, the Court entered the Order signed by Judge William H. Walls reducing the application for award of fees and reimbursement of expenses. The fee application was reduced from an award of 33% to 22% of the settlement fund, i.e. $193,600, and granted reimbursement of expenses of $51,819.69. The Court further entered the Order of Final Approval, Final Judgment and Order of Dismissal.
Earlier, on October 16, 1996, and Judge William H. Walls issued an Order denying motions to reopen the case and consolidated cases after Judge Walls administratively terminated the case. The plaintiff filed a Notice of Appeal, and on December 17, 1997, the Court entered the Memorandum Opinion and Judgment of the U.S. Court of Appeals, dismissing the appeal for lack of jurisdiction. On December 19, 1997, the plaintiff filed a motion to reopen and consolidated the cases and, on February 23, 1998, the case was reopened. The judge appointed lead plaintiff and approved lead counsel, and an Amended Complaint was filed. On September 21, 2998, the Court entered the Order for Administrative termination, and on February 10, 2000, the Court entered the Order preliminarily approving the Settlement.
The original complaint alleges that PRINS violated GAAP by employing the "accrual" method of accounting for receivables but employing the "cash accounting method" for certain expenses and delaying payment of expenses until the fourth quarter of 1995. Plaintiffs allege that the Company had inadequate internal financial controls such that its financial statements did not accurately reflect the Company's true financial condition and obligations. Plaintiffs also claim that the Company's third quarter financial statements were materially misleading in that they based current assets on an inflated valuation of its paper inventory. Plaintiffs claim that during the third quarter, PRINS improperly capitalized certain expenses to conceal a severe cash flow problem and financial losses. Plaintiffs allege that individual defendants engaged in a deliberate scheme to defraud investors by inflating the stock price and then cashing out in a proposed secondary offering in the fall of 1995. Defendants purportedly directed employees to defer third quarter expenses to inflate the financial statements in preparation for the $10 million sale of their common stock. They also purportedly directed employees to purchase stock in order to create an artificial appearance of demand. After the offering was allegedly aborted, individual defendants nevertheless sold shares at what plaintiffs claim was still an inflated price. According to the complaint, the company overpaid for various acquisitions, which it pursued with an eye towards enhancing its revenue claims. Finally, plaintiffs assert that the Company did not fully disclose the precipitous decline in recycled paper prices during the summer of 1995. All of this allegedly resulted in artificially inflated and materially overstated first, second, and third quarter 1995 financial statements. On April 19, 1996, PRINS revealed a FY1995 loss of $.32/share on allegedly record revenue of $76 million. The stock price fell from a class period high of $19.375 per share on June 14, 1995 to a low of $3.00 per share on April 19, 1996. The complaint alleges violations of sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and rule 10b-5 promulgated thereunder.