The original Complaint alleges that OCA and certain of its officers violated federal securities laws. Specifically, the Complaint alleges that certain of defendants' public statements during the Class Period were materially false and misleading because (i) defendants engaged in improper accounting practices (OCA, which has not yet filed its annual report for 2004, has announced that it will restate its financial results for the first three quarters of 2004); (ii) certain journal entries in OCA's general ledger were improperly recorded; (iii) certain data provided to OCA's accounting firm had been improperly changed; and (iv) OCA could not ascertain its true financial condition because it lacked adequate internal controls. As a result, OCA's patient receivables and patient revenue from its affiliated orthodontic and pediatric dental practices were materially overstated.
The complaint further alleges that on or around June 7, 2005, OCA announced that (i) it was further delaying the filing of its annual report; (ii) it intends to restate its financial results for the first three quarters of 2004; and (iii) its Chief Operating Officer had been placed on administrative leave. After this announcement, the stock plummeted over 38%.
NOTE: On March 14, 2006, OCA and its various subsidiaries filed a petition for voluntary bankruptcy protection.
On November 18, 2005, the Court entered the Order and Reasons granting the appointment of lead plaintiff in the securities action. On November 30, 2005, the Court entered the Order approving the selection of Kaplan Fox & Kilsheimer LLP as lead counsel and Neblett, Beard & Arsenault as liaison counsel. On February 1, 2006, the plaintiff filed a Consolidated Class Action Complaint, and the defendants filed motions to dismiss the Consolidated Class Action Complaint. After hearing oral arguments on the defendants' motion to dismiss, the judge entered his order dismissing one of the individual defendants but denying the motion to the two remaining individuals. Defendants have since filed their answer to the consolidated complaint and the discovery process has begun. On May 25, 2007 a derivative suit was filed for breach of fiduciary duties against certain individuals and third party companies on behalf of the OCA Chapter 11 Trust. The derivative claims were dismissed by the Order issued on December 4, 2007.
On August 25, 2008, a motion for preliminary approval of settlement and certification of settlement class was filed. According to the Stipulation and Agreement of Settlement dated August 21, 2008, the proposed settlement is in the amount of $6,500,000 in cash. On October 17, 2008, Chief Judge Sarah S. Vance granted the lead plaintiff’s motion for preliminary approval of settlement. The Settlement Fairness Hearing is set for February 10, 2009 before Chief Judge Vance.
On March 2, 2009, Chief Judge Sarah S. Vance granted the motion for final approval of the class action settlement and further approved the motion for attorney fees. According to the Order, Class Counsel is awarded 28.5% of the common fund and $179,466.05 in expenses. On March 10, 2009, Judge Vance signed the Order dismissing the Securities Cases with prejudice. On May 19, 2009, the Court further dismissed the Derivative cases.