According to the docket, on November 21, 2001, a Stipulation and Agreement of Settlement was filed, and on November 28, 2001, the Court entered the Judgment signed by U.S. District Judge Loretta A. Preska. Pursuant to Rule 23 of the FRCP, the Court certified the action as a class action, the settlement and the Plan of Allocation were approved, and the case was closed.
By the Notice of Pendency, the Action is stayed as against Conti due to its May 17, 2000 bankruptcy petition under Chapter 11 of the United States Bankruptcy Code Conti's bankruptcy reorganization plan was confirmed as of December 19, 2000.
On March 15, 2000, the case filed in the U.S. District Court for the Eastern District of New York was interdistrict transferred to the U.S. District Court for the Southern District of New York.
As reported by the Company’s FORM 10-Q for the quarterly period ended December 31, 1999, the Company, along with the other defendants, is seeking to have all seven cases consolidated in the Southern District of New York; plaintiffs are seeking to consolidate the litigation in the Eastern District of New York. Also pending is a motion under the Private Securities Litigation Reform Act of l995 for the appointment of lead plaintiffs and lead plaintiffs' counsel. While the Company intends to defend these actions vigorously, any filing by the Company under Chapter 11 of the Bankruptcy Code would operate automatically to stay the prosecution of the litigation against the Company
The original complaint charges ContiFinancial, certain of its officers and directors and its controlling shareholder with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that ContiFinancial and certain of its officers and directors issued a series of materially false and misleading statements regarding the Company's financial condition and the level of prepayments the Company was experiencing. As a result of these materially false and misleading statements, plaintiff alleges that the price of ContiFinancial common stock was artificially inflated during the Class Period. Before the disclosure of the aforementioned adverse facts, certain ContiFinancial insiders sold thousands of shares of ContiFinancial common stock to the public and the Company completed several acquisitions.