On September 15, 2008, the Settlement Hearing was held before U.S. District Judge John Antoon II. At the hearing, the settlement was approved and the judge approved the motion for attorneys’ fees and reimbursement of expenses.
According to a press release dated June 30, 2008, a settlement has been proposed in a class action about the alleged inflation of the price of PainCare common stock during the Class Period. The settlement will provide a settlement fund of two million dollars ($2,000,000) for the benefit of investors who purchased PainCare common stock during the Class Period and it is authorized by the United States District Court for the Middle District of Florida, Orlando Division. The Court will hold a hearing to decide whether to approve the settlement before any money is paid out.
As summarized by the Company’s FORM 10-Q For the Quarterly Period Ended September 30, 2007, on March 21, 2006, a complaint was filed under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against the Company, as well as the Company’s chief executive officer and chief financial officer, before the United States District Court for the Middle District of Florida. … Ten additional complaints were filed shortly afterward before the same court which recite similar allegations. (Collectively, these cases will be referred to as the “Securities Litigation.”) Lead counsel was selected and a consolidated complaint was filed. On September 20, 2006, the Company filed a motion to dismiss the pending securities class action with the Federal District Court. Subsequently, the District Court referred the matter to a Federal Magistrate for a hearing, report and recommendation. On January 17, 2007, the Magistrate held a hearing and took the matter under submission. On March 26, 2007, the Magistrate issued a report which recommended that the District Court dismiss all outstanding claims with leave to amend. On April 25, 2007, the District Court signed an order adopting the Magistrate’s report and dismissed the Securities Litigation, with leave to amend. An amended consolidated class action complaint was filed on May 23, 2007. By motion filed June 7, 2007, the Company again moved to dismiss the action. The Magistrate held a hearing regarding the Company’s dismissal motion at the conclusion of the hearing, the matter was taken under submission by the Magistrate on August 15, 2007. As of the date hereof, the Magistrate Judge has yet to issue his report and recommendation on the Company’s motion.
Several purported shareholder class action lawsuits have been filed against PainCare Holdings, Inc. and certain of its executive officers alleging that defendants violated the federal securities laws by overstating and exaggerating the company's financial health. In particular, according to the complaint, PainCare went on a buying spree, growing its business by corporate acquisition, but accounting for such acquisitions in violation of Generally Accepted Accounting Principles ("GAAP"). Accordingly, the company overstated its earnings by failing to comply with GAAP in recording its noncash growth. On March 15, 2006, the last day of the class period, the company announced that it would have to restate its financial figures going back to 2000--to its founding--in order to adjust for the improper accounting of its corporate acquisitions.
The complaint further alleges that in the wake of the revelation of the defendants' wrongful conduct, the company's stock sunk to new lows, having recently traded at under $1.75 per share--down from its class period high of $5.25 per share. In just the first day of trading following the announced restatement, PainCare's stock dropped 12.6%, on extremely heavy volume, down over 50% from its class period high.
The lawsuit has been filed on behalf of all persons who purchased or otherwise acquired the publicly traded securities of PainCare Holdings, Inc. during the Class Period. Also included are all those who acquired PainCare in a secondary offering in October of 2004, or through the acquisitions of Dynamic, Denver Pain, PainCare, Inc., Amphora, REC, Inc., PHS Alpha, Center for Pain Management or Desert Pain.
On April 9, 2010 the Court issued an Order granting the Plaintiff’s Motion for Approval of Distribution of the Settlement Fund to Plaintiff Class.