The original complaint seeks damages for violations of federal securities laws on behalf of all investors who acquired Whitney stock from November 18, 2003 through and including December 15, 2006 (the "Class Period"). Based in Cape Coral, Florida, Whitney is a post secondary education company that offers financial and real estate investing courses.
The lawsuit claims that Whitney, its Chief Executive Officer and its former Chief Operating Officer violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading statements to the investing public. Specifically, the lawsuit alleges that defendants issued a series of false and misleading statements, emphasizing the success of numerous acquisitions of related companies, as well as the efficacy of the Company's marketing programs. Capitalizing on the rapid increase in the Company's stock price resulting from these positive announcements, defendants completed a private placement of Whitney stock in December 2005, in which defendant Whitney sold 1.25 million of his own holdings for proceeds of over $5.6 million.
The complaint further alleges that between November 21, 2006 and December 15, 2006, the truth concerning the Company and its fraudulent business practices began to surface. On November 21, 2006, defendants revealed that the Securities and Exchange Commission had begun an investigation to determine whether the Company violated any securities laws in connection with: (a) the efficacy or trading success of the Company's stock market education programs; and (b) the Company's acquisition of certain other companies. Then, on December 15, 2006, it was revealed that the United States Attorney for the Eastern District of Virginia had launched a grand jury investigation into the marketing activities of the Company, stretching back to 2002. A few days later, it was announced that defendant Maturo as well as Whitney's Vice President of Sales had "departed" from the Company. In response to the news, Whitney stock plunged from $8.20 per share to less than $4 per share on December 18, 2006 on unusually heavy trading volumes.
On April 25, 2007, the judge entered his order consolidating all related cases and appointing an individual as the lead plaintiff. The judge granted the plaintiff's choice of lead counsel but denied the plaintiff's request for Saxena White PA to serve as liaison counsel. Saxena White, P.A. was later named as liaison counsel after motions were re-filed by the plaintiff. On July 10, 2007, the lead plaintiff filed a Consolidated Amended Class Action Complaint. The defendants filed motions to dismiss on September 28, 2007 and January 7, 2008. On November 17, 2008, the Court entered the Order denying the defendants’ two pending motions to dismiss the Consolidated Amended Class Action Complaint. The Consolidated Amended Complaint was also stricken, and the plaintiffs were allowed to file an amended complaint within twenty days.
On December 8, 2008, the plaintiff filed a Consolidated Amended Class Action Complaint. The defendants responded by filing two motions to dismiss on January 30, 2009. On November 10 and 13, 2009, the Court entered the Decision and Order signed by Judge Avern Cohn granting the motions to dismiss and dismissed the Consolidated Amended Class Action Complaint. The case is now closed.