According to NewsEDGE Corporation’s 10-K filing for the fiscal year ended December 31, 1998, on May 27, 1998, the U.S. District Court for the District of Massachusetts dismissed the class action in its entirety. Plaintiffs appealed the dismissal to the U.S. Court of Appeals for the First Circuit. Oral arguments were heard on December 10, 1998. On March 22, 1999, the United States Court of Appeals for the First Circuit entered judgment affirming the District Court's dismissal of the class action.
The original complaint was filed against Individual, Inc., which later merged with Desktop Data, Inc. to form NewsEDGE Corp. The complaint alleged that the company's prospectus (for an initial public offering of the company's common stock) contained material false and misleading statements as well as material omissions that rendered the prospectus false and misleading. In particular, the complaint alleges that the company, under the direction and control to disclose a serious rift between the CEO and Board over the direction of the company and (ii) failed to accurately disclose the company's acquisition strategy. The complaint also alleged that the company's lead underwriters are liable to the proposed class for disseminating a false and misleading prospectus in order to further the public offering of the company's stock. The complaint alleged that the false and misleading statements and omissions were part of a scheme by the defendants to facilitate the company's sale of its common stock and allow an insider to sell a block of stock at an artificially inflated value. After this information was disclosed to the market, the company's stock price allegedly fell by approximately $4 per share. Based on these allegations, the complaint asserts violations of Sections 11, 12(2) and 15 of the Securities Act of 1933. The complaint also asserted violations of Sections 410(a)(2) and 410(b) of the Massachusetts Blue Sky Laws.