Case Page

 

Case Status:    DISMISSED    
On or around 06/13/2006 (Other)

Filing Date: May 13, 2004

According to a press release dated June 15, 2006, NYFIX, Inc. (Pink Sheets: NYFX) announced that, on June 13, 2006, the U.S. District Court for the District of Connecticut dismissed the class action lawsuit, Johnson v. NYFIX, Inc., as to NYFIX and all other defendants based on a stipulated Notice of Dismissal, filed by the parties on June 9, 2006, in which plaintiffs agreed to the dismissal without costs or attorneys' fees or any consideration of any kind being paid to any party. Begun in May 2004, the lawsuit alleged violations of the federal securities laws based on NYFIX's issuance of a series of allegedly false and misleading financial statements and press releases concerning, among other things, NYFIX's investment in NYFIX Millennium.

In a press release dated November 15, 2005, the U.S. District Court for the District of Connecticut granted a company's motion to dismiss a group of investors' complaints alleging violations of federal securities laws. The district court held that the investors had not properly pleaded fraud in their complaint. Douglas Johnson, THS&H Investment Associates L.L.C. and Bruce Frank sued on behalf of themselves and a class of other investors who purchased the common stock of NYFIX Inc. from Mar. 30, 2000, to Mar. 30, 2004. The plaintiffs alleged that NYFIX and five of its executive officers violated § 11 of the Securities Act of 1933 (the Act) and that two executives violated § 15 of the Act. Plaintiffs also alleged that NYFIX and three executives violated § 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 promulgated thereunder. The plaintiffs further alleged that three executives violated § 20(a) of the Exchange Act. All allegations arose from NYFIX's method of accounting for its investment in NYFIX Millenium L.L.C., which led NYFIX to report inflated financial results in numerous SEC filings, a registration statement and several press releases. The district court held that, although NYFIX's executives had the opportunity to commit fraud as required under the Private Securities Litigation Reform Act (PSLRA), the plaintiffs failed to adequately demonstrate motive. The district court held that mere ownership of stock without a corresponding personal benefit tied to alleged misrepresentation could not constitute motive. Similarly, using inflated stock to transact a merger or acquisition does not alone support a finding of motive.

The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The Complaint names as defendants NYFIX, Inc. and certain of its officers and/or directors. The Complaint alleges that during the Class Period, the Defendants perpetrated a scheme to artificially inflate NYFIX's stock price by issuing a series of materially false and misleading financial statements and press releases which, among other things, overstated the value of NYFIX Millennium, L.L.C. ('Millennium'), a private company in which the Company held a substantial ownership interest and which represented a substantial portion of the Company's assets during the Class Period. More specifically, the Company's Form 10-K's filed with the Securities and Exchange Commission ('SEC') for 1999, 2000, 2001 and 2002 and the press releases announcing the financial and business performance of the Company for the fiscal years 1999 - 2003, were materially false and misleading and omitted to state material information because the Company: (a) improperly accounted for its 1999 original investment in, and 2002 acquisition of an additional interest of, Millennium; (b) failed to properly allocate losses incurred by Millennium to the Company; (c) overstated the value of Millennium on the Company's balance sheet; and (d) failed to properly write down Goodwill from the 2002 acquisition of Millennium. The Company failed to properly record $20.1 million in accumulated losses for the years ended December 31, 1999, 2000, and 2001, painting a much different financial picture of the Company than had been disclosed. Defendants perpetrated this scheme in order to enable the Company to raise over $60 million in a public common stock offering and to use the Company's artificially inflated stock (along with the cash raised in the offering) to purchase other companies.

The complaint further alleges that on March 30, 2004, NYFIX issued a press release which stated, 'Based on its discussions with the SEC staff, the Company will restate its audited results for the years ended December 31, 1999 through 2002 to change the manner in which it accounted for the 1999 original investment in, and 2002 acquisition of an additional interest of, NYFIX Millennium.' The market reacted negatively to this news. On the first day of trading after the announcement, the Company's stock traded on very heavy volume and closed down over 7% at $5.16 per share.

COMPANY INFORMATION:

Sector: Technology
Industry: Computer Networks
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: NYFX
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: D. Connecticut
DOCKET #: 04-CV-00802
JUDGE: Hon. Janet C. Hall
DATE FILED: 05/13/2004
CLASS PERIOD START: 03/30/2000
CLASS PERIOD END: 03/30/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Gardy, LLP (New York)
    212 East 39th Street, Abbey Gardy, LLP (New York), NY 10016
    212.889.3700 · info@abbeygardy.com
  2. Law Offices of Charles J. Piven, P.A.
    World Trade Center-Baltimore,401 East Pratt Suite 2525, Law Offices of Charles J. Piven, P.A., MD 21202
    410.332.0030 · pivenlaw@erols.com
  3. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
No Document Title Filing Date
COURT: D. Connecticut
DOCKET #: 04-CV-00802
JUDGE: Hon. Janet C. Hall
DATE FILED: 11/16/2005
CLASS PERIOD START: 08/19/2002
CLASS PERIOD END: 08/19/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Gardy, LLP (New York)
    212 East 39th Street, Abbey Gardy, LLP (New York), NY 10016
    212.889.3700 · info@abbeygardy.com
  2. Abbey Spanier Rodd Abrams & Paradis, LLP (New York)
    212 East 39th Street, Abbey Spanier Rodd Abrams & Paradis, LLP (New York), NY 10016
    212-889-3700 212-684-519 · info@abbeyspanier.com
  3. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
  4. Shepherd, Finkelman, Miller & Shah, LLC
    35 East State Street, Shepherd, Finkelman, Miller & Shah, LLC, PA 19063
    877.891.9880 · jshah@classactioncounsel.com
No Document Title Filing Date