The original Class Action lawsuit was filed on behalf of a class consisting of all persons who purchased or otherwise acquired securities of Team Telecom International Ltd. ('TTI' or the 'Company').
The Complaint charges, among others, TTI and certain of the Company's executive officers with violations of federal securities laws. Plaintiff claims that defendants' omissions and material misrepresentations concerning TTI's operations and performance artificially inflated the Company's stock price, inflicting damages on investors. The Complaint alleges that throughout the Class Period TTI engaged in a systematic scheme of accounting fraud to maintain the facade of a steadily growing enterprise. In order to facilitate this appearance, the Company engaged in a series of flagrant violations of generally accepted accounting principals ('GAAP'), including, but not limited to, improperly classifying assets and liabilities, improperly failing to report its subsidiary's earnings on a consolidated basis and prematurely and improperly recognizing revenues.
On November 12, 2002, a Company press release announced TTI's third quarter 2002 financial results. The press release announced revenues for the quarter of $10.3 million, compared with $16.0 million for the third quarter of 2001, and an operating loss of $6.8 million for the quarter, versus an operating profit of $3.3 million in the year-ago quarter. Net loss for the quarter was $6.1 million, or a loss of $0.51 per diluted share, versus a net profit of $3.7 million, or $0.32 per diluted share, in the prior year. This news shocked the market, causing TTI shares to plummet more than 28% on the same day the financial results were announced, November 12, 2002, and an additional 7% on heavy trading for the two days following the announcement.
NOTE: TTI is an Israeli corporation headquartered in Petach Tikvah, Israel, and a provider of network management systems, operations support systems and business support systems for communications service providers.
The initial complaint was filed on September 3, 2004. After being appointed Lead Plaintiff, Leumi filed its consolidated class action complaint on June 17, 2005, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 1 0b-5 promulgated thereunder. Before the resolution of a motion to dismiss, Lead Plaintiff filed a first amended consolidated class action complaint (“FAC”) on February 24, 2006. Defendants filed another motion to dismiss.
On October 6, 2006, the Court granted the motion to dismiss the FAC but granted Lead
Plaintiff leave to amend the complaint within 30 days. On November 9, 2006, Lead Plaintiff filed the Second Amended Complaint (“SAC”). Defendants filed a motion to dismiss the SAC on January 10, 2007. On May 2, 2007, after full briefing and argument by the parties, the Court issued an order denying the motion to dismiss the SAC as to Defendants TTI, Lipshes, and Ofer, but granting the motion to dismiss the SAC as to Defendants Shlomo Eisenberg and Team Software Industries Ltd.
Beginning May 2, 2007, the parties effectively stayed the action, except for Defendants’ filing of an Answer, in an effort to resolve this litigation through good-faith settlement negotiations. As a result of a mediation session before retired California Superior Court Judge Daniel Weinstein on November 27, 2007, the Parties reached an agreement in principle to settle the Litigation for the sum of $4,300,000.
On May 29, 2008, District Court Judge Peter G. Sheridan granted the motion to preliminarily approve the settlement. On September 11, 2008, Judge Sheridan signed the Final Judgment and Order. According to the Order, the settlement is approved, the court awarded attorney fees and reimbursement of expenses and dismissed the action with prejudice.