The original Complaint alleges that defendants violated federal securities laws by issuing a series of materially false statements. Specifically, defendants failed to disclose the following: (i) that ASG was not charging its customers in accordance with applicable contracts; (ii) that ASG failed to properly credit customers with discounts, rebates or price savings resulting from purchases from alternative sources; (iii) that ASG failed to provide customers with proper credit for the return of pharmaceutical products; (iv) that defendants inappropriately established and used reserves during various periods over the last five years to more closely match SPP reported earnings to its budgeted results; and (v) that as a result of the foregoing, the values of ASG's net income, retained earnings and reserves were materially overstated at all relevant times.
The complaint further alleges that after the markets closed, on March 15, 2006, ASG announced that as a result of the findings of an internal investigation, it would restate earnings for the years ended December 31, 2001 through December 31, 2004 and for the first six months of 2005 and issue refunds of $3.6 million, plus interest, to customers for instances in which it failed to credit them with discounts, rebates or price savings to which they were entitled. On this news, the price of ASG fell $5.65, or almost 29%, to close at $13.95 per share.
On August 19, 2008, U.S. District Judge William J. Haynes approved MARTA/ATU Local 732 Employees Retirement Plan as lead plaintiff and approved lead plaintiff’s selection of Lerach Coughlin Stoia Geller Rudman & Robbins LLP as lead counsel. On October 31, 2006 a Consolidated Amended Class Action Complaint was filed for violation of federal securities laws. On January 19, 2007 the defendants filed a motion to dismiss the complaint. The motion to dismiss the Consolidated Amended Class Action Complaint is currently pending before the Court.
On March 31, 2009, District Judge William J. Haynes, Jr. granted in part and denied in part the defendants’ motion to dismiss. According to the Memorandum filed in Court, certain claims are dismissed with prejudice, but the defendants’ motion to dismiss is otherwise denied.
On July 23, 2009, the case was administratively closed as the parties engaged in mediation proceedings. On April 30, 2010, the Lead Plaintiff filed an Unopposed Motion for Preliminary Approval of Class Action Settlement. According to the Settlement Agreement, the proposed settlement is in the amount $10,500,000 in cash, plus 300,000 shares of America Service Group common shares. On May 3, 2010, District Judge William J. Haynes, Jr., preliminarily approved the settlement. On May 11, 2010, the case was administratively reopened.
On October 18, 2010, District Judge William J. Haynes, Jr., signed the orders approving the settlement, the plan of allocation, and attorneys' fees and expenses. The action is now dismissed with prejudice.