The original Complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by, among other things, issuing false and misleading statements regarding XO's financial condition as well as its present and future business operations. In particular, the Complaint alleges that defendants misled the investing public concerning the Company's ability to finance its business operations until it becomes cash- flow positive. Throughout the Class Period, defendants stated that XO had sufficient cash to survive at least into mid 2003 without the need for further financing. These statements were false, and on November 29, 2001, defendants announced a transaction where the shareholders' equity was destroyed in exchange for a cash infusion of $800 million. Trading in the Company's stock was immediately halted.
According to the docket, on April 18, 2002, XO Communications filed a motion to dismiss the consolidated amended complaint. On May 31, 2002, the court entered the Order by U.S. District Judge Leonie M. Brinkema granting the motion to dismiss the consolidated amended complaint. The action was dismissed with prejudice and the case closed. The plaintiff's motion for reconsideration of the order granting the motion to dismiss the action was later denied on June 17, 2002.