According to the docket, on May 14, 2007 the judge submitted his final Order and Judgment dismissing the case and affirming the settlement amount of $775,000 while awarding attorneys' fees and expenses of $273,539.50. One month later, both parties agreed to voluntarily dismiss an interlocutory appeal and the case was administratively closed.
According to the Company’s FORM 10-Q for the quarterly period ended December 31, 2005, subsequent to the SEC action a number of class action lawsuits were initiated in the U.S. District Court for the Southern District of Florida by Company stockholders against the Company, Sherb & Co. LLP, the Company's former independent auditor, and certain of the Company's directors and officers, including the Company's former Chief ExecutiveOfficer/Chairman, and the Company's former CFO and current acting Chief Executive Officer. These suits allege essentially the same claims as the SEC suit. The defendants filed certain Motions to Dismiss with regard to the Complaint and on October 19, 2005, the U.S. District Court for the Southern District of Florida in Re Spear & Jackson Securities Litigation entered its Order regarding these Motions. The Order denied the Company's motion as well as that of the former Chief Executive Officer of Spear & Jackson. The Company is in the process of preparing its answer and defenses to the Complaint. The Court granted the Motion to Dismiss on behalf of the Company's interim Chief Executive Officer, and also granted the Motion to Dismiss of the Company's former auditor, Sherb & Co., LLP. The Court denied the motion of Spear & Jackson's Monitor to abate the litigation for a six-month period pending the administration of the SEC's restitution fund. The Court also denied the Plaintiff's Motion for Clarification and established a new cut-off for discovery until December 19, 2005. The case has been set on the Court's two-week calendar beginning March 6, 2006.
The original complaint alleges that during the Class Period defendants disseminated materially false and misleading information to the investing public that artificially inflated SJCK's share price. According to the complaint, the true facts which were known by each of the defendants, but concealed from the investing public during the Class Period, were as follows: (i) that defendants orchestrated a 'pump-and dump' scheme to manipulate the share price of SJCK stock by issuing false information to tout SJCK stock to registered representatives and broker-dealers around the country; (ii) that defendants used nominee companies based in the British Virgin Islands illegally to obtain over 1.2 million shares of SJCK stock during 2002, some of which was obtained through the filing of a fraudulent Form S-8 registration statement; (iii) that the Company's repurchase of shares was not in compliance with applicable rules; (iv) that the Company never had any intention of making open market purchases as suggested in its January 16, 2004 release; and (v) that the Company was not on track to achieve earnings of $0.50 to $0.55 per share for 2004. As a result of the defendants' false statements, SJCK's stock price traded at inflated levels during the Class Period, increasing to as high as $9.55 on July 15, 2003, whereby the Company's top officers and directors sold more than $3 million worth of their own shares. On April 16, 2004, it was announced that U.S. securities regulators had sued SJCK Chief Executive, alleging he used false information to boost the Company's stock price while secretly selling $3 million in shares. SJCK shares fell $0.52 to $1.85 on this news.