According to a press release dated April 25, 2005, a federal judge has granted final approval of a $7 million settlement in a class action securities suit against Ravisent Technologies Inc. brought by investors who said the company used false statements to inflate the price of its stock at the time of its initial public offering. In his 32-page opinion in In re Ravisent Technologies Inc. Securities Litigation, U.S. District Judge R. Barclay Surrick of the Eastern District of Pennsylvania also awarded attorney fees equal to one-third of the settlement fund -- more than $2.3 million -- to plaintiffs' lawyers from six firms who logged more than 1,700 hours on the case over four years. Sharing the fees will be four Philadelphia firms -- Spector, Roseman & Kodroff, the Law Offices of Bernard M. Gross, Berger & Montague, and Barrack, Rodos & Bacine -- and two New York firms, Milberg Weiss Bershad & Schulman and Kaplan Fox & Kilsheimer. The settlement stems from 11 consolidated lawsuits filed in the wake of news in early 2000 that Ravisent -- a Massachusetts software company now known as Axeda Systems Inc. -- was restating its financials and reporting significant losses.
The Complaint alleges that Ravisent and certain of its officers and directors violated the Securities Exchange Act of 1934. According to the Complaint, defendants commenced and engaged in a scheme to artificially inflate the revenues and profits of Ravisent by improperly recording revenues on contracts in violation of generally accepted accounting principles in order to accomplish the Company's Initial Public Offering (``IPO'') at the maximum prices per share. The Complaint further alleges that defendants' scheme included creating the illusion that Ravisent was an increasingly profitable company. Pursuant to their scheme, defendants determined to effectuate the IPO during the fiscal quarter so that no current period certified financial statements of Ravisent would be included. On February 18, 2000, defendants announced that the release of its 1999 audited financial statements would be delayed due to final audit procedures as a result of the company's discussions with its independent auditors concerning Ravisent's having inappropriately recognized revenue in 1999 on certain contracts. As a result of this announcement, Ravisent's share price plunged $9 to close at $18 9/18 on trading volume in excess of 3,500,000 shares.