MCSi, Inc. is an investment research firm servicing institutional investors and hedge funds.

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 July 24, 2001 to February 26, 2002. According to the Complaint, throughout the Class Period, Defendants issued numerous statements in quarterly and annual press releases regarding the supposed strength of its business, particularly the success of its high-margin systems integration business. According to the Complaint, these, and other representations detailed therein, were materially false and misleading because they failed to disclose that MCSi's business was deteriorating overall and that its integration services business was not operating as successfully as Defendants had represented. The Complaint further alleges that the scheme was designed to artificially inflate the price of MCSi's common stock in order to allow MCSi insiders to profit by selling their shares of MCSi common stock at artificially inflated prices in two follow-on public offerings. On August 15, 2001, MCSi sold 4 million shares in a secondary offering at $11.50 per share and on December 19, 2001, the Company and certain selling shareholders, including Defendant Peppel who sold 200,000 shares for gross proceeds of $4,575,000, undertook another public offering, selling a total of 5.2 million shares of MCSi common stock at $22.875 per share. Then, on February 26, 2002, the Company shocked the market by reporting a 29% decline in sales for the fourth quarter of 2001, and a loss of $0.24 per share (including a restructuring charge). In reaction to this announcement, the price of MCSi common stock plunged by 40%, falling from a $17.35 per share close on February 25 to a close of $10.40 per share on February 26, on extremely heavy trading volume.

On June 20, 2003, the Defendant MCSi filed for Chapter 11 bankruptcy protection. On July 25, 2003, the Court entered the Order staying all proceedings pursuant to the automatic stay in bankruptcy. On May 5, 2004, the Plaintiffs filed a Corrected Amended Complaint. On December 2, 2004, the Plaintiffs filed a motion to certify the class. The action moved to mediation.

According to an article dated July 31, 2007, on July 5, 2007, the U.S. District Court for the Southern District of Ohio granted Plaintiffs' motion to lift a bankruptcy stay as to nonsolvent individual corporate directors in a securities fraud class action. Shareholders of MCSi sued the Company and two of its individual directors for securities fraud in a class action. … The district court granted the motion to lift the stay as to the individual Defendants because there were no unusual circumstances warranting a stay.