According to the docket, on June 21, 2004, the Court entered the Order and Final Judgment signed by U.S. District Judge Donovan W. Frank. The Court granted the motion for final approval of the settlement, the plan of allocation and the award of attorney fees and reimbursement of expenses.
Earlier, on May 15, 2002, Court entered the Memorandum, Opinion, and Order denying Chronimed’s motion to dismiss the amended and consolidated class action complaint. On March 15, 2004, a hearing was held and Judge Frank granted preliminary approval of the class action settlement. A Stipulation and Agreement of Settlement was also filed that day.
The original complaint charges defendants with violations of sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that during the Class Period, defendants issued to the investing public false and misleading financial statements and press releases concerning the Company's publicly reported earnings, net income, and liabilities. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. On June 14, 2001, prior to the opening of the market, Chronimed shocked the investing community by announcing that the Company intends to adjust reported revenue, earnings, and accounts receivable for the fiscal year ended June 30, 2000 and the three quarters ended March 30, 2001 because Chronimed's overall revenue, earnings, and receivables have been overstated for those periods. The Company explained that problems in its StatScript retail computer accounting systems and procedures allowed certain prescriptions to be recorded as revenue more than once. The Company added that it believes the adjustments will be material to its previously reported financial statements, and therefore, prior financial statements should not be relied upon, and the Company is suspending its previous guidance on financial performance until it completes its ongoing review and produces restated financial statements. These disclosures contradicted much of the information provided by defendants to the market during the Class Period concerning its financial results and caused the NASDAQ to halt trading in Chronimed at 9:22 A.M. Eastern Time until the Company fully satisfies the NASDAQ's request for additional information. The last trading price before the NASDAQ halted trading was $9.35 per share.