According to docket posted for this case, on March 22, 2000, U.S. District Judge Dickinson R. Debevoise granted the motion for approval of the settlement and disbursement of attorney fees and expenses. The case was ordered closed. However, on May 8, 2000, the case was reopened with respect to claims against certain defendants in the case. Judge Debevoise ultimately granted the distribution of settlement fund and the case was closed on December 26, 2000.
The complaint asserts that PCNI and three of its officers violated the Securities Exchange Act of 1934 by publishing false and misleading financial statements, reporting fictitious profits of $10 million in 1997, when in fact, the Company had suffered losses, now estimated to range from $77 million to $81 million. The plaintiff, a purchaser of PCNI shares, alleges that the market price of the stock was artificially inflated during the Class Period as a result of the misrepresentations. TD On March 3, 1998, the Company revealed that it would be restating its financial statements for the first three quarters of 1997, because rather than achieving net earnings as previously announced, the Company had incurred a net loss in each of the three quarters. Following this announcement PCNI common stock lost more than 70% of its value. On April 2, 1998, the Company further stunned the investing public by revealing that actual losses from 1997 operations will range between $77 and $81 million, and that the Company's auditors, KPMG Peat Marwick, have withdrawn their auditor's report on the Company's 1996 financial statements, adding that these statements should not be relied upon. Following this announcement, trading was halted for the Company's stock on NASDAQ. The Complaint alleges that PCNI and its top officers intentionally or recklessly overstated the Company's income by improperly recognizing items of income, and failing to recognize items of expense, and misstated the Company's financial condition, including cash balances, accounts receivable, good will, and other assets, in order to secure a $110 million credit facility. This credit facility was announced on Sept. 12, 1997. According to the Complaint, if not for the false earnings, the Company could not have obtained this credit on favorable terms or at all.