According to the docket, on March 18, 2002, the final fairness hearing was held before U.S. District Judge M.J. Lorenz. On March 19, 2002, the court entered the Orders approving the plan of allocation of the settlement proceeds and awarding plaintiff counsel’s attorney fees of 25% of the settlement fund plus reimbursement of expenses in the amount of $79,424.14. The Court further entered the Final Judgment and Order of Dismissal with prejudice, and the case was terminated.
In a press release dated June 1, 2001, Mitek Systems Inc. announced that it has reached a tentative settlement of a consolidated class-action securities litigation lawsuit that has been pending in the United States District Court for the Southern District of California since October of 2000. The lawsuit sought an undetermined amount of damages on behalf of purchasers of Mitek's securities between Dec. 27, 1999, and Sept. 29, 2000. The suit alleged that Mitek's securities sold during the class period at inflated values due to allegedly improper reporting of quarterly earnings. Under the terms of the tentative settlement, Mitek continues to dispute the merits of the lawsuit but has approved a compromise payment of $2 million, which will be funded entirely by Mitek's directors and officers liability insurance carrier for the benefit of shareholder class members. The settlement will remain tentative until executed and after it has been approved by the court and until after proper notices have been sent to the various individual and institutional shareholders comprising the plaintiff class.
The original complaint charges Mitek and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Mitek is involved in character recognition technology, products, and services for the document imaging markets. The complaint alleges that during the Class Period, defendants represented that Mitek recorded revenue in compliance with the applicable accounting standard for software revenue recognition, AICPA Statement of Position ("SOP") 97-2, and reported favorable but false financial results. As a result, Mitek's stock traded at artificially inflated levels. Defendants took advantage of these inflated prices, selling more than $3.2 million worth of their own Mitek stock. On 9/29/00, Mitek announced that the Company will restate its third quarter 2000 financial statements as a result of accounting misstatements that will require eliminating $1.4 million in revenue to be removed from the quarter for failing to comply with AICPA Statement of Position 97-2.