The complaint charges First Alliance and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that the directors and officers of First Alliance and its subsidiaries pursued a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of First Alliance stock during the Class Period. Defendants' scheme was designed to and did enable First Alliance's controlling shareholders Brian Chisick and Sarah Chisick to sell nearly 5.088 million shares in a secondary stock offering for proceeds exceeding $90.2 million. These stock sales were successfully accomplished in significant part because of the reported apparent growth in First Alliance's earnings per share ("EPS"), and defendants' statements about First Alliance achieving significant net income and EPS growth in 1998 and 1999, resulting in its stock price trading at a significantly higher price/earnings ratio than was the case with First
Alliance's competitors. However, just months after the secondary offering,
First Alliance was forced to reveal that it would report lower than expected
results in the second quarter of 1998, in part due to the fact that it would no
longer rely upon the improper assumptions it had previously used to calculate
its earnings. As a result, First Alliance's stock price declined from its Class
Period high of $24-1/8 per share in October 1997 to as low as $3-$4 per share.
On December 14, 1999, the Court entered a Notice regarding the intra-district transfer of the case from the Southern Division to the Western Division and reassigning the case to U.S. District Judge Florence-Marie Cooper under new case number CV 99-13084-FMC(AJWx).
On January 4, 2000, the plaintiff filed a Notice to dismiss the action without prejudice. On January 6, 2000, the Court entered the Order by U.S. District Judge Florence-Marie Cooper dismissing the action without prejudice, in its entirety, pursuant to FRCP 41(a)(1)(i), and the case was terminated.