Several similar class action complaints have also been filed in the United States District Court for the District of Massachusetts, Southern District of New York and the Eastern District of New York.
The original complaint charges Xcelera and certain of its officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On April 1, 1999, defendants issued a press release announcing that Xcelera had acquired Mirror Image, Co., and made positive statements in this and subsequent press releases regarding the acquisition without disclosing that Xcelera shareholders could have their interests significantly diluted. The complaint further alleges that Xcelera misled investors by failing to inform them that another corporate transaction involving Mirror Image could cause them to incur significant tax liabilities. These materially misleading statements caused Xcelera's common stock to be artificially inflated throughout the Class Period. Meanwhile, Xcelera insiders took advantage of the inflated price to sell approximately 1.6 million of their own shares. When the truth was revealed, the price of Xcelera's stock collapsed to $11.75 per share, dramatically below its Class Period high of $112.50.
In early 2001, several class action complaints filed in four different federal district courts were interdistrict transferred to the District of Massachusetts. The actions were subsequently consolidated by an Order entered on February 2, 2001. Lead plaintiffs and counsel were also appointed.
As summarized by the co-lead counsel’s website, on April 2, 2001, the Lead Plaintiffs filed their Consolidated Amended Class Action Complaint (the “Amended Complaint”), which Xcelera moved to dismiss on May 31, 2001 and Plaintiffs opposed on July 16, 2001. On October 3, 2001, the Court held a hearing on Defendants’ Motion to Dismiss, and Judge Rya Zobel issued an order granting in part and denying in part Defendants’ motion on March 8, 2002. Defendants filed their answer to the Amended Complaint on April 9, 2002. Judge Rya Zobel issued an order granting class certification on September 30, 2004. In early March of 2005 the Defendants sought to appeal the class certification order. On December 13, 2005 the First Circuit Court of Appeals affirmed Judge Zobel’s September order certifying the class and the insider trading subclass. Factual and expert discovery have been completed. A final pretrial conference is scheduled for December 19, 2007.
On September 20, 2007, the defendants filed a motion for summary judgment. On April 26, 2008, Judge Rya W. Zobel denied the defendants’ motion for summary judgment. The defendants filed a motion for reconsideration/leave to renew the defendants’ motion for summary judgment. On May 12, 2008, Judge Zobel signed the Judgment granting the renewed motion for summary judgment. This court dismissed the complaint and the case as to all defendants with prejudice.