The original complaint charges Midway and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Midway develops and publishes software for major video game systems. Specifically, the complaint alleges that during the Class Period, defendants assured investors that Midway would perform as expected in the fourth quarter of 2005. In fact, the Company did not perform as expected because defendants had decided to lay off 8% of the Company’s workforce and engage in costly restructuring. Before the full costs of these decisions were made public, however, defendants were able to sell off over $14 million of their shares on the open market within three weeks of one another. On May 24, 2006, defendants announced that they would have to sell $75 million in convertible notes that would be highly dilutive to current shareholders in order to raise cash. In response to this announcement, Midway’s stock price fell to $7.39 per share.
On September 10, 2007, the U.S. District Judge David H. Coar granted the motion to consolidate related actions, and on October 16, 2007, the Court granted the motion to appoint Andre Pappas and Giancarlo Dimizio as Lead Plaintiffs and approved Coughlin, Stoia Geller, Rudman and Robbins LLP and the law firm of Lasky and Rifkind, Ltd., as Lead and Liaison Counsels, respectively. On December 17, 2007, a Consolidated Amended Complaint was filed. On February 15, 2008, the defendants responded by filing motions to dismiss the Consolidated Amended Complaint.
On February 20, 2009, a Suggestion of Bankruptcy was filed as to Midway Games, Inc. On March 3, 2009, the plaintiffs voluntarily dismissed Midway Games without prejudice from the action. The action is still pending against the remaining individual defendants.
On October 19, 2009, the Honorable David H. Coar granted the defendants’ motion to dismiss the Consolidated Amended Class Action Complaint.