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Case Status:    SETTLED
On or around 02/14/2006 (Date of order of final judgment)

Filing Date: March 07, 2002

According to the Final Judgment and Order of Dismissal, entered on February 14, 2006, from U.S. District Judge Honorable Vanessa D. Gilmore of the U.S. District Court of the Southern District of Texas, the case was settled.

In a press release dated February 10, 2006, Cornell Companies, Inc. announced the settlement of a securities class action lawsuit. In re Cornell Companies, Inc. Securities Litigation was originally filed by certain Cornell stockholders in March 2002 on behalf of all purchasers of Cornell's common stock from March 6, 2001 to March 5, 2002. The Company has agreed to settle this class action lawsuit for $7.0 million to avoid further protracted and expensive litigation. The settlement amount will be funded through the Company's directors' and officers' liability insurance and will have no impact on the Company's financial position, results of operations or cash flows. Under the terms of the settlement, Cornell has not admitted to any wrongdoing.

As reported by the Company’s FORM 10-Q For the Quarterly Period Ended September 30, 2005, in March and April 2002, the Company, its former President and Chief Executive Officer, and its former Chief Financial Officer, were named as defendants in four federal putative class action lawsuits. These four lawsuits were consolidated into the Graydon Williams action and Flyline Partners, LP was appointed lead plaintiff. As a result, a consolidated complaint was filed by Flyline Partners, LP. Since then, the court allowed plaintiffs to file an amended consolidated complaint. The amended consolidated complaint alleges that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5 promulgated under Section 10(b) of the Exchange Act, Section 20(a) of the Exchange Act, Section 11 of the Securities Act of 1933 (the “Securities Act”) and/or Section 15 of the Securities Act. The amended consolidated complaint seeks, among other things, restitution damages, compensatory damages, rescission or a rescissory measure of damages, costs, expenses, attorneys’ fees and expert fees. The Company filed a motion to dismiss the lawsuit. In an order entered April 1, 2005, the court granted the motion to dismiss with respect to the plaintiffs’ securities fraud claims pursuant to Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5. The court denied the motion to dismiss as to the remaining claims covering the Company’s secondary offering in 2001. Subject to court approval and documentation, the parties have agreed to settle this matter.

The original complaint charges Cornell and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Cornell is a provider of privatized correctional, detention and pre-release services to governmental agencies. The complaint alleges that during the Class Period, defendants issued favorable but false financial statements and made false and misleading statements about the Company's business. As a result of these false statements, the Company's stock traded as high as $18.40. Defendants took advantage of this artificial inflation, selling 3.4 million shares of Cornell stock for proceeds of over $48 million in a November 2001 secondary offering. On February 6, 2002, Bloomberg ran an article on the Company which stated in part: ``Cornell Cos., which operates 69 prisons in 13 states and the District of Columbia, said it will review the accounting of an August real estate transaction involving 11 properties. Its shares fell as much as 63 percent. The company received a letter Thursday from auditor Arthur Andersen LLP that raised concern about the transaction, said Larry Stein of FRB Weber Shandwick, a firm that handles public relations for Cornell. The Andersen review was part of a year-end audit.'' Upon these disclosures, Cornell's stock dropped to as low as $6.50 before closing at $9.96 on February 6, 2002, some 45% below the Class Period high of $18.40. On March 6, 2002, the Company issued a press release entitled, ``Cornell Companies Inc. to Restate Its Financials for Year Ended December 31, 2000 and Subsequent Quarters.'' On this news, the Company's shares plummeted once again by more than 10%.

COMPANY INFORMATION:

Sector: Services
Industry: Business Services
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: CRN
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. Texas
DOCKET #: 02-CV-00866
JUDGE: Hon. Vanessa D. Gilmore
DATE FILED: 03/07/2002
CLASS PERIOD START: 03/06/2001
CLASS PERIOD END: 03/05/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Bernstein Liebhard & Lifshitz, LLP (New York)
    10 E. 40th Street, 22nd Floor, Bernstein Liebhard & Lifshitz, LLP (New York), NY 10016
    800.217.1522 · info@bernlieb.com
  2. Cauley Geller, Bowman Coates & Rudman, LLP (Boca Raton, FL)
    One Boca Place. 2255 Glades Road, Suite 421A, Cauley Geller, Bowman Coates & Rudman, LLP (Boca Raton, FL), FL 33431
    561.750.3000 561.750.3364 ·
  3. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
  4. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
  5. Stanley, Mandel & Iola LLP (Dallas)
    3100 Monticello Avenue, Suite 750 , Stanley, Mandel & Iola LLP (Dallas), TX 75205
    214.443.4300 ·
No Document Title Filing Date
COURT: S.D. Texas
DOCKET #: 02-CV-00866
JUDGE: Hon. Vanessa D. Gilmore
DATE FILED: 10/30/2003
CLASS PERIOD START: 03/06/2001
CLASS PERIOD END: 03/05/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 ·
  2. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
No Document Title Filing Date