According to the docket, on September 26, 2001, the Court entered the Order and Final Judgment by U.S. District Judge Naomi R. Buchwald. The Court approved the Settlement, the proposed Plan of Allocation, and the action was dismissed with prejudice. Counsel for plaintiffs and the Class were awarded fees in the amount of $592,500 as 30% of the Settlement Fund, plus reimbursement of expenses in the amount of $23,777.58, plus interest. The case is closed.
On December 22, 2000, defendants filed a motion to dimiss the action. Following briefing of that motion, the parties reached an agreement in principle to settle the action for $1.975 million. On June 5, 2001, the court preliminarily approved the settlement. A hearing on plaintiffs' application for final approval of the settlement and for an award of attorneys' fees and expenses is scheduled for August 3, 2001.
On April 7, 2000, the first action against Grand Toys was commenced in the United States District Court for the Southern District of New York. By order dated July 17, 2000, the court appointed plaintiffs' lead and liaison counsel for the proposed class of Grand Toys investors.
The action asserts claims for violations of sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 (15 U.S.C. §78j(b), §78t(a), and §78t-1) and SEC Rule 10b-5 (17 C.F.R. 240.10b-5) against Grand Toys International, Inc., and officers and directors of the company. Specifically, the complaint alleged that, during the Class Period, defendants: (i) caused the price of Grand Toys' stock to be artificially inflated through the issuance of a press release containing positive, yet false, news about a business agreement that the company claimed to have signed; (ii) illegally sold almost all of their stock during the next three weeks, as the stock price sextupled, for $21.8 million dollars; and (iii) after having sold these shares, then disclosed to the public that the aforementioned press release was inaccurate, causing Grand Toys' share price immediately to plummet. Specifically, on August 4, 1999, defendants caused Grand Toys to issue a press release stating that Grand Toys had "entered into an exclusive licensing agreement" to manufacture and distribute a line of Pokemon products in Canada. In the next three weeks, based on this news, the share price of Grand Toys more than sextupled from a market close of $4.625 on August 3, 1999 to trade at over $30 per share on August 25, 1999. On August 26, 1999, Grand Toys issued a press release "clarifying" the licensing agreement it had announced three weeks earlier, in which defendants admitted: (i) that at the time of the August 4, 1999 announcement of the licensing agreement, the contract had not in fact been fully executed; and (ii) that the contract, by now fully executed, did not grant to Grand Toys the originally-claimed "exclusive" rights to Pokemon products. Before issuing this "clarification", however, defendants engaged in extensive insider selling. Each individual defendant sold between 88% and 100% of his entire holdings in Grand Toys; collectively, the individual defendants sold over 1.7 million shares of Grand Toys in three weeks and received over $21.8 million from their insider selling. The share price of Grand Toys common stock fell sharply and immediately subsequent to the August 26, 1999 press release.