According to the docket posted, on June 29, 2004, the plaintiffs filed a notice of appeal from the Judgment dismissing the complaint. On August 20, 2004, the Court entered the certified copy of the Mandate of the Second Circuit Court of Appeals dismissing the appeal.
In a Press Release dated April 28, 2004, the court dismissed the first amended complaint with leave to file a second amended complaint, concluding that the amended complaint fails to plead that each defendant made misrepresentations and that it utilizes group pleading for the scienter allegations, which fails with respect to each of the individual defendants.
The original complaint charges Cross Media and its Chief Executive Officer
and Chairman of the Board of Directors, with violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, by issuing a
series of materially false and misleading statements to the market during the
Class Period. On November 5, 2001, the start of the Class Period, Cross Media
announced that it expected both revenues and earnings for 2002 to increase in
excess of 50 percent. Defendants continued to issue numerous press releases
during the Class Period which touted the Company's performance and represented
that revenues and earnings were increasing. Additionally, defendants
misrepresented the impact and nature of the FTC proceedings brought against the
Company and others. The material misstatements and omissions had the cause and
effect of creating in the market an unrealistically positive assessment of Cross
Media and its business, finances and operations, thus causing the Company's
common stock to be overvalued and artificially inflated at all relevant times.
The truth regarding Cross Media was not fully disclosed until July 12, 2002,
when defendants finally revealed that Cross Media would have a loss for the
second quarter of 2002 and that revenues for the year would be significantly
less than previously predicted. In reactions to the July 12 news release and
conference call, the common stock price of Cross Media dropped drastically, from
$6.54 on July 10, to $4.88 on July 11, to $2.71 on July 12.