This securities fraud action stems from allegedly false and misleading information contained in a registration statement and prospectus of Rickel Home Centers ("Rickel"). The Securities and Exchange Commission declared the Rickel prospectus effective on October 28, 1994, for an initial public offering ("IPO") of shares of stock. On November 9, 1994, Baffa purchased shares of Rickel stock for his then minor son Brett and placed them in a Uniform Gifts to Minors Act ("UGMA") account designated Robert Baffa, C/F/A, Brett Baffa, UGMA/NY. Soon after, the price of Rickel stock declined drastically, and Baffa sold the shares at a loss. The complaint alleged principally that defendants violated Sections 11 and 15 of the Securities Exchange Act of 1933, 15 U.S.C. §§ 77k, 77o, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t, as well as Rule 10b-5, 17 C.F.R. § 240.10b-5, by providing false and misleading financial information in the Rickel prospectus and registration papers. Baffa claimed that defendants failed to disclose in the prospectus four financial indicators - -net sales, gross profit, EBIDTA (the sum of earnings before income tax [operating income] depreciation, and amortization), and operating income (loss) after debt expense - - which reflected a decline in Rickel's business during the third quarter of 1994 and that left it "in an extremely precarious financial condition at the time of the Offering."
On April 22, 1999, the action was dismissed for failure of plaintiffs and plaintiffs' counsel to proceed with the action after the court's Order of December 7, 1998, and for failure of plaintiffs' counsel to pay the $45,000.00 agreed to by the parties in lien of a court imposed sanction. The plaintiff filed a Notice of Appeal and on September 25, 2000, the Court entered the Mandate of the US Court of Appeals affirming in part and reversing in part the judgment of the district court. The case was reopened.
By the closing Order, dated January 30, 2001, the Court "SO ORDERED" a stipulation providing for non-binding mediation and a stay of proceedings in the Litigation pending the outcome of the mediation. The amount of the Settlement proposed to be distributed to the members of the Class before deduction of Court-approved attorneys' fees and reimbursement of expenses is $3,000,000 in cash plus interest as of February 1, 2002.
According to the docket, on April 30, 2002, the Court entered the Final Order and Judgment approving the settlement as set forth in the Stipulation of Settlement dated December 18, 2001. The action was dismissed with prejudice and the case was closed. On June 19, 2002, the Court further entered the Order awarding plaintiff’s counsel 30% of the recovery, or $900,000.00, plus accrued interest on this amount and reimbursement of costs and expenses in the aggregate amount of $230,122.57. Lastly, on April 16, 2003, the Court entered the Order granting the motion for an Order approving the distribution of the Settlement Fund.