As reported by the Company’s FORM 10-Q For The Quarterly Period Ended December 31, 1999, on September 18, 1997, the District Court dismissed the class-action lawsuit and all related claims. The plaintiffs appealed the dismissal of the action to the U.S. Court of Appeals for the Sixth Circuit. On July 8, 1999, the Court of Appeals affirmed the dismissal of the action by the District Court. The plaintiffs sought a rehearing before the entire Sixth Circuit Court of Appeals, which was denied on August 23, 1999. The plaintiffs did not petition the U.S. Supreme Court to hear an appeal of the dismissal within the required time frame, and the dismissal of the action became final in November, 1999.
The original complaint alleges that Comshare and three of its officers and directors violated the federal securities laws by inflating reported earnings by improperly recognizing revenue that had not been earned. By issuing these allegedly false and misleading quarterly financial results on April 17, 1996, defendants artificially inflated Comshare's stock price throughout the Class Period, allowing one of Comshare's top insiders to sell 39,000 shares of his Comshare stock at $24.60 per share, for proceeds of almost $1 million, before the true facts about Comshare's false financial statements and internal control failures were revealed and Comshare's stock collapsed to as low as $11.62 per share, a 50% decline in one week, thereby damaging plaintiff and other members of the Class who purchased the stock relying on the market price to accurately reflect the company's true value. Four complaints in total were consolidated.