By the Order and Final Judgment entered on January 19, 2006 and signed by U.S. District Judge Charles R. Simpson III, the Settlement with remaining defendants Kring & Brown LLP and Shefsky & Froelich Ltd. is approved and dismissed with prejudice. Further, Plaintiffs’ Settlement Counsel are awarded, all from the Gross Settlement Fund, attorneys’ fees in the amount of $240,000.00, and reimbursement of their expenses in the amount of $4,271.48.
According to a press release dated October 10, 2005, a hearing will be held on January 5, 2006, at 1:30 p.m. in the United States District Court for the Western District of Kentucky, United States Courthouse, Louisville, KY 40202 to determine: (1) whether a proposed settlement of the class action with (i) Kring & Brown LLP and (ii) Shefsky & Froelich Ltd. for Eight Hundred Thousand Dollars ($800,000.00) in cash plus accrued interest should be approved by the Court as fair, reasonable, and adequate; (2) whether the application of Plaintiffs' Counsel for an award of attorneys' fees and reimbursement of expenses should be approved; and (3) whether the action should be dismissed with prejudice.
On July 7, 2004, the Order and Final Judgment was entered granting the motion for settlement and granting the motion for attorney fees. According to the Notice Of Pendency of Class Action and of Partial Settlement dated April 8, 2004, the case was partially settled as to defendants Advanced Equities, Inc. and certain individuals for $2,650,000.
This litigation (the "Action") is pending in the United States District Court for the Western District of Kentucky (the "Court"). The Action was brought pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), as well as Rule 10b-5 promulgated thereunder, against: former officers and directors of Pixelon, Inc.; (ii) Advanced Equities, Inc.; (iii) certain officers and/or board members of Advanced Equities, Inc.,; (iv) Kring & Brown, LLP; and (v) Shefsky & Froelich Ltd. (collectively, "Defendants"). Pixelon has filed for bankruptcy and is not a party to this Action.
This Action was commenced by the filing of a Class Action Complaint on or about June 30, 2000, as a securities class action on behalf of persons who purchased the securities or held stock of Pixelon against certain Pixelon directors and other Defendants. On December 21, 2001, the Court consolidated as part of the Action a related lawsuit styled Wenk, et al. v. Advanced Equities, Inc., et al., Civil Action No. 3:01-CV-544(H) (W.D. Ky.), which had been originally filed in the United States District Court for the Central District of California and subsequently was transferred to this Court. On July 3, 2002, the Court appointed George M. Lawson, Maria Swift, William C. Dugdale, and H. Grant Hathaway as lead plaintiffs for the Class (defined below). On the same date, the Court also certified as Lead Counsel for the Class the law firms of Berger & Montague, P.C., Sales Tillman & Wallbaum, and J. Bruce Miller Law Group (collectively, "Plaintiffs' Settlement Counsel").
Plaintiffs filed a Consolidated Amended Complaint (the "Complaint") on July 17, 2002. The Complaint alleges that investors who purchased Series A Preferred Shares of Pixelon in a private placement were defrauded by certain Pixelon Directors and other Defendants. The primary business of Pixelon, an internet company, was to develop and market an internet broadcasting network. In 2000, Pixelon filed for bankruptcy. In the Complaint, the Plaintiffs allege, inter alia, that they were defrauded in connection with their purchases of Pixelon stock because: (1) the value of the Company allegedly was overstated in the Private Placement Memorandum; (2) the Defendants allegedly knew or should have known that the background of Defendant, the President and founder of Pixelon, was false and incomplete; (3) the Private Placement Memorandum allegedly failed to make adequate disclosures regarding the ownership and development of Pixelon's technology; and (4) the President and founder of Pixelon's background and the reasons for his termination from Pixelon in November 1999 were not explained to the investors.