Yahoo! Inc. is an American global internet services provider.

The original Complaint charges Yahoo! and certain of its officers and directors with violations of the Securities Exchange Act of 1934, specifically sections 10(b) and 20(a). The Complaint alleges that Yahoo!’s stock rose precipitously on Defendants’ positive statements concerning Yahoo!’s sales growth, record reported revenues and earnings and strong business fundamentals, which Defendants stated would provide further stability and growth, reaching a Class Period high of over $43 per share on January 6, 2006. On July 19, 2006, the Company’s stock price fell by 22% on heavy volume after the Company announced second quarter 2006 financial results that were lower than investors had been led to expect and analysts downgraded Yahoo!’s stock, erasing billions of dollars in market capitalization.

According to the Complaint, Defendants’ Class Period statements describing Yahoo!’s business model, financial results and continued sales and earnings growth potential were false and misleading as: (a) Yahoo! generated fraudulent revenue by deliberately misleading Internet advertising business customers to induce these customers to buy Yahoo! advertising products through deceptive means; (b) Yahoo! made false, misleading, and deceptive representations regarding its advertising technology and products to investors and potential investors, industry analysts, and customers to increase sales and stock prices; (c) Yahoo!’s false, deceptive, and misleading representations were material in that they had a natural tendency to influence, or were capable of influencing, purchasing decisions, and they related to the essential characteristics, quality, and/or nature of competing products and commercial activities, including relevance, potential click-throughs and quality; (d) Yahoo!’s advertising technology was operationally defective, causing its own advertising offerings to substantially under-perform those of its rivals; (e) whereas Yahoo!’s rivals were paying high-traffic vendors to route traffic through their Web sites, Yahoo! was charging large vendors for access and was dependent on that revenue to make its revenue targets, making Yahoo!’s Web site a less desirable location for vendors to drive traffic to; and (f) Yahoo! was losing market share to Google and other Internet search providers.

As summarized by the Company’s Form 10-Q for the quarterly period ended March 31, 2009, in May 2007, two purported class actions were commenced by Plaintiffs Ellen Brodsky and Manfred Hacker, asserting claims arising under the federal securities laws against the Company and certain individual Defendants. These actions were ordered consolidated in the U.S. District Court for the Central District of California, and on December 21, 2007, a Consolidated Amended Complaint was filed against Yahoo! and certain individual Defendants, including current and former officers and a former director and officer. Plaintiffs purport to represent a class of persons who purchased the Company’s common stock between April 8, 2004 and July 18, 2006. Plaintiffs allege that Defendants engaged in a scheme to inflate the Company’s stock price by making false and misleading statements regarding the Company’s operations, financial results, and future business prospects in violation of Section 10(b) of the Exchange Act and SEC Rule 10b-5. Plaintiffs also allege that the individual Defendants engaged in insider trading in violation of Section 20(A) of the Exchange Act, and as control persons are subject to liability under Section 20(A) of the Exchange Act. Plaintiffs seek compensatory damages, injunctive relief, disgorgement of alleged insider trading proceeds, and other equitable relief.

On March 10, 2008, the Court granted Defendants’ motion to transfer the action to the U.S. District Court for the Northern District of California. On October 7, 2008, the Court granted Defendants’ motion to dismiss the Consolidated Amended Complaint with leave to amend. Plaintiffs filed their Second Amended Consolidated Complaint on December 19, 2008. On April 23, 2009, the Court held a hearing on Defendants’ motion to dismiss.

On June 18, 2009, Judge Claudia Wilken granted the Defendants’ motion to dismiss without leave to amend. Judgment was entered the same day.