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Case Status:    SETTLED
On or around 04/14/2006 (Date of order of final judgment)

Filing Date: November 27, 2002

According to the Order and Final Judgment, entered on April 14, 2006, and signed by U.S. District John W. Sedwick, the Stipulation and Settlement is approved as fair and the Action is dismissed with prejudice. Further, the Plan of Allocation is approved as fair and reasonable, and the Plaintiffs’ Counsel are awarded 25% of the Gross Settlement Fund in fees and $39,093.26 in reimbursement of expenses.

As reported to the Company’s FORM 10-Q for the quarterly period ended September 30, 2005, the Company, its former chief executive and two of its former chief financial officers were defendants in a federal securities action (the Federal Securities Action) that was pending in the U.S. District Court for the District of Arizona. The Consolidated Amended Complaint (Complaint) filed in this Action alleged, among other things, that during the period from July 21, 2000 through October 24, 2002 the defendants made false and misleading statements and omissions of material facts and that the plaintiff and other members of a putative class of shareholders suffered damages as a result. This Complaint was dismissed by order of the District Court in July 2004. The plaintiffs appealed this order of dismissal to the Ninth Circuit Court of Appeals in August 2004. At the request of the parties, the Appellate Court vacated the original briefing schedule of this appeal and the Court has not established a new briefing schedule. The plaintiffs and the defendants in this action have reached a tentative settlement of this matter under which the defendants would pay the purported class $2.55 million. The tentative settlement is subject to initial documentation, confirmatory discovery, final documentation and approval by the Court. Assuming that this settlement is ultimately consummated by the parties and approved by the District Court, the Company expects that its insurance will cover the entire settlement amount.

According to an earlier SEC filing, specifically the Company's FORM 10-Q for the quarterly period ended September 30, 2003, in September 2003, the Wisconsin Federal Court appointed a lead plaintiff and lead counsel in the Federal Securities Actions, consolidated the three actions and granted defendants’ motion to transfer the actions to the U.S. District Court for the District of Arizona (the Arizona Federal Court). The lead plaintiff is expected to file an amended consolidated complaint in the Arizona Federal Court and the defendants intend to move to dismiss that complaint on various grounds.

The original complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by
issuing a series of materially false and misleading statements to the market
between February 2, 2001 to October 24, 2002. For example, according to the
complaint, throughout the Class Period, eFunds issued press releases announcing
quarter after quarter of record results of operations, with revenues and
earnings doubling in several quarters during the Class Period. The financial
statements contained in such press releases were repeated in quarterly and
annual reports filed with the SEC. According to the complaint, such statements
were materially false and misleading because they failed to disclose that
eFunds had been improperly recognizing revenue during the Class Period.
Specifically, according to the complaint, the Company recognized revenues on
certain contracts immediately which, according to generally accepted accounting
principles, should have been deferred over a period of time. Accordingly, the
complaint alleges, eFunds materially inflated its revenues and revenue growth
rate throughout the Class Period. On March 4, 2002, eFunds issued a press
release announcing that it was 'revising its previously announced results of
operations for the year ended December 31, 2001' because the Company had
recognized revenue from two transactions in the second quarter of 2001 which
should have been recorded in the third quarter as a single transaction, or, in
the alternative, as a reduction in operating expenses instead of revenue. The
revision required a reduction of the Company's reported 2001 revenue by $5
million. According to the complaint, that announcement, however, did not
disclose the truth regarding the Company's improper revenue recognition. On
October 25, 2002, before the open of trading, eFunds shocked the market by
announcing that it would "delay the release of its earnings for the quarter
ended September 30, 2002, while the Company completes a review of the
accounting treatment given to various transactions that occurred in 2000 and
2001 and certain tax matters related to the Company's India based operations."
In response to the announcement, the price of eFunds common stock fell by 10%
in one day, from a close of $9.65 per share on October 24, 2002 to close at
$8.68 per share on October 25, 2002, on unusually large trading volume, and
representing a decline of 66% from the Class Period high of $25.49 per share
reached on May 18, 2001.


Sector: Technology
Industry: Computer Services
Headquarters: United States


Ticker Symbol: EFDS
Company Market: NASDAQ
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: E.D. Wisconsin
DOCKET #: 02-CV-01164
JUDGE: Hon. Charles N. Clevert
DATE FILED: 11/27/2002
CLASS PERIOD END: 10/24/2002
  1. Bernstein Liebhard & Lifshitz, LLP (New York)
  2. Cauley Geller Bowman Coates & Rudman LLP (Little Rock, AR)
  3. Law Offices of Charles J. Piven, P.A.
  4. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
No Document Title Filing Date
COURT: D. Arizona
DOCKET #: 03-CV-01915
JUDGE: Hon. Charles N. Clevert
DATE FILED: 12/30/2003
CLASS PERIOD END: 10/24/2002
  1. Ademi & O'Reilly, LLP
  2. Milberg Weiss Bershad & Schulman LLP (New York)
  3. Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY)
No Document Title Filing Date
—Related District Court Filings Data is not available