Advanced Marketing Services, Inc. ("Advanced Marketing" or the Company) is a book publishing wholesaler and distributor, primarily selling to warehouse stores.

The Complaint alleges that Defendants violated the Securities Exchange Act of 1934. The Complaint alleges that during the Class Period, Defendants are alleged to have issued or caused to be issued a series of false and misleading statements to the marketplace resulting in Advanced Marketing's stock price trading at artificially inflated levels.

Specifically, the Complaint alleges that the Company's stock traded as high as $25.00 before it announced that it would restate its previously filed financial statements for each of the fiscal years in the five-year period ending March 31, 2003. The false and misleading statements Defendants are alleged to have issued, or caused to be issued to the marketplace, concern the Company's net income, advertising revenue and related costs. Advanced Marketing has announced that the amount of net income that was erroneously stated and will have to be reversed might be more than 10 percent of all net income reported during the affected period.

According to a press release dated May 20, 2006, Advanced Marketing said it agreed to settle a class-action shareholder lawsuit for $6 million, subject to court approval. The lawsuit filed in federal court in San Diego against the Company stems from a fraud and accounting scandal that surfaced in 2003. Ongoing investigations by the Justice Department and the Securities and Exchange Commission found fraudulent accounting practices that resulted in overstatement of Advanced Marketing's pre-tax earnings. Three former company executives also have pleaded guilty to criminal charges related to a scheme not to tell retail clients of credit due them for advertising and promotion services. The shareholder lawsuit alleged that San Diego-based Advanced Marketing indulged in fraudulent accounting practices and that key executives made false statements about the Company's earnings from 1999 through 2003. In March, Advanced Marketing revised downward its earnings from 2000 to 2004. In a filing with the SEC, Advanced Marketing said it will receive $10.5 million from settling its claims against several insurance companies. The money will be used to pay the shareholder lawsuit settlement and some legal costs, according to the filing. The insurance carriers denied coverage for some issues involved in the Advanced Marketing scandal, according to the filing.

As summarized by the lead Counsel’s website, on July 31, 2006, U.S. District Court Judge Roger T. Benitez granted preliminary approval of the parties’ settlement and plan of allocation. On October 16, 2006, the Court entered the Order of Final Judgment and Dismissal of the Action with Prejudice and granted final approval of the Settlement, the Plan of Allocation of Settlement Proceeds and the Request for Attorneys’ Fees and Reimbursement of Expenses.

On May 25, 2007, a Motion was made for Disbursement of Funds Notice of Motion and Motion for Order Authorizing Distribution of Settlement. On July 26, 2007, an Order was entered granting the Motion for Disbursement of Funds.