According the Company’s FORM 10-Q For The Quarterly Period Ended June 30, 2005, the Company agreed to settle the case for $525,000. The Court has issued a Preliminary Order approving the settlement and the full amount was funded in February 2005. Notices have been sent to class members and the Court conducted the Final Settlement Hearing on July 26, 2005, and approved the settlement.
As summarized by the same SEC filing, in June 2000, a lawsuit was filed against the Company, its directors and its executive officers seeking compensatory damages in an undisclosed amount on the basis of allegations that the Company’s amended registration statement dated November 4, 1998 was inaccurate and misleading concerning the manner in which the Company recognized ceded insurance commission income, in violation of Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Specifically, the plaintiffs alleged that the Company recognized ceded commission income on a written basis, rather than amortized on a pro rata basis. The plaintiffs alleged that this was contrary to the Statement of Financial Accounting Concepts Nos. 1, 2 and 5.