According to an article dated November 15, 2007, on October 10, 2007, the U.S. District Court for the Southern District of New York found that a securities fraud claim against an auditor complied with Rule 11 because the complaint was sufficiently supported. Shareholders of Ramp Corp. sued the company and its auditor, BDO Seidman L.L.P. alleging that Ramp made material misrepresentations as to its financial health that caused its stock to be falsely inflated and caused the shareholders to lose money. The complaint named BDO, but did not allege that BDO audited financial statements that contained materially false statements. … The district court found the plaintiffs' complaint satisfied the reasonableness standard under Rule 11. The district court did not rule on the plaintiffs' counsel's request for attorney's fees pending submission of additional information.
On July 5, 2007, the Court entered the Memorandum Opinion and Order granting approving the settlement and the Plan of Allocation. The Court is still awaiting a decision on the motion for attorney's fees and expenses.
In a press release dated April 26, 2007, pursuant to an Order of the United States District Court, a hearing will be held regarding the proposed settlement (the "Settlement") in In re Ramp Corporation Securities Litigation, Civil Action No. 05 cv 6521 (DLC) (the "Action"), on June 29, 2007 at 3:00 p.m, before Judge Denise Cote, at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, Courtroom 11B, New York, New York. At the hearing, the Court will consider: (a) whether this Action satisfies the applicable prerequisites for class action treatment under Rule 23 of the Federal Rules of Civil Procedure; (b) whether the terms of the proposed settlement, which, among other things, provides for the creation of a Settlement Fund in the amount of two million seventy-five thousand dollars ($2,075,000), are fair, reasonable and adequate, and should be approved by the Court.
As summarized by the Notice of Proposed Class Action and Its Settlement dated Marc 23, 2007, beginning in July 2005, three proposed class actions were filed in the United States District Court for the Southern District of New York, and assigned to the Honorable Denise Cote. In an order dated October 18, 2005, the Court: (1) consolidated the three actions under the caption In Re Ramp Corporation Securities Litigation, No. 05 Civ. 6521 (DLC); (2) appointed Plaintiffs Mark Lorenzo, Vincent Collucio, and Brian Steele as Lead Plaintiffs in the Action; and (3) approved Lead Plaintiffs’ selection of Murray, Frank & Sailer LLP as Lead Counsel. On December 16, 2005, Lead Plaintiffs filed a “Consolidated Class Action Complaint” (the “Complaint”) against certain officers and directors of Ramp: Andrew Brown, Darryl Cohen, Mitchell Cohen, Ron Munkittrick, and Jeffrey Stahl (collectively, the “Ramp Defendants”), as well as BDO (with the Ramp Defendants, the “Original Defendants”). On July 21, 2006, the Court granted the Original Defendants’ motions to dismiss in part. … The Court’s July 21, 2006 decision dismissed all claims based on any statements made before April 14, 2004 (the date Ramp filed its 2003 10-K signed by Brown), so all members of the Settlement Class who purchased Ramp stock on the open market before that date lost standing to assert claims as to that earlier portion of the Class Period. Thereafter discovery commenced. Lead Plaintiffs reviewed tens of thousands of pages of documents obtained from Ramp through motion practice before the United States Bankruptcy Court. On September 5, 2006, with the Court’s permission, Defendant Darryl Cohen again moved to dismiss the Section 20(a) claim against him. On October 13, 2006, Lead Plaintiffs moved for class certification. These motions were both pending when the Settlement in principal was reached on November 13, 2006.
The original complaint alleges that the Ramp and certain of its present and former officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making materially false and misleading representations and omissions in public filings with the Securities and Exchange Commission. The complaint alleges that on May 21, 2005, BDO Seidman LLP resigned as the Company's auditor and advised Ramp that the Company's 2003 and 2004 audit reports were unreliable. The complaint further alleges that as a result of such information, Ramp stated that is would not file its quarterly report on Form 10-Q for the quarter ended March 31, 2005 on time, which led to its defaulting on certain debentures. It is also alleged in the complaint that the Company’s CEO resigned and was suspended on May 22, 2005 because he may have violated Company policies or the law when he received an unspecified amount of cash as a gift in December 2003. The complaint alleges that the Company filed for reorganization under Chapter 11 of the Bankruptcy laws on June 2, 2005, and that the American Stock Exchange notified it on June 6, 2005 that it was delisting the Company's stock. It is alleged that when Seidman announced that it was resigning and that Ramp's financial statements were unreliable, trading in the Company's stock was halted on May 23, 2005. At the time, Ramp's stock was trading at $1.25 per share. When the Company's stock began trading again, it decreased in price to $0.10 per share.