According to a press release dated May 18, 2005, the lead plaintiffs have filed a Notice Of Agreed Motion And (Proposed) Order Of Voluntary Dismissal. On May 13, 2005, the United States District Court Judge entered the (Proposed) Order voluntarily dismissing the Complaint for Violation of the Federal Securities Laws and lawsuit without prejudice.
After further investigating this matter, lead plaintiffs and their counsel concluded that the Complaint should be voluntarily dismissed without prejudice. Accordingly, pursuant to Federal Rule of Civil Procedure 41(a)(1), lead plaintiffs notified defendants of their intent, and defendants agreed to the dismissal, with each side bearing its own costs. No consideration has been exchanged, and neither lead plaintiffs nor their counsel will receive any compensation or reimbursement of expenses.
The complaint alleges that during the Class Period, defendants caused deCODE's shares to trade at artificially inflated levels through the issuance of false and misleading statements, including by concealing its continuing internal control problems. As a result of this inflation, deCODE was able to complete a public offering of $150 million worth of convertible notes in April 2004, raising net proceeds of $144 million. The complaint specifically alleges that defendants deCODE, and certain of its officers and directors 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 material misrepresentations to the market between October 29, 2003 and August 26, 2004. More specifically, the Complaint alleges that the defendants' statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (1) that Company's period-end financial closing procedures were materially deficient; (2) as such, deCODE, during the Class Period, improperly recognized revenue in violation of Generally Accepted Accounting Principles; (3) that the Company lacked adequate internal controls; and (4) that as a result of the above, the Company's financial statements were materially inflated at all relevant times.
Then, on August 26, 2004, deCODE filed a Form 8-K with the SEC in which it disclosed the resignation of its outside accountant (PricewaterhouseCoopers) and disclosed a 'reportable condition' with respect to deCODE's closing procedures. On this news, deCODE's stock collapsed to $5.70 per share on August 27, 2004, 58% below the Class Period high of $13.80 per share.
NOTE: deCODE is a population genetics company developing drugs and deoxyribonucleic acid (DNA)-based diagnostics, based upon its discoveries in the inherited causes of common diseases.