The original complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material misrepresentations to the market which had the effect of artificially inflating the market price.
Specifically, the complaint alleges that this case concerns material and misleading statements made with the intent to mislead the investing public and conspiracy on the part of Defendants to artificially inflate the market price of securities of SOI during the Class Period. As detailed herein, throughout the Class Period, SOI and its former President and Chief Executive Officer issued numerous materially false and misleading statements regarding the Company’s financial performance and prospects to the investing public. These statements were made with the knowledge and encouragement of Defendants all of whom were officers and/or directors of SOI during the Class Period. Defendants SOI and certain individual Defendants bribed stock brokers employed by Defendants Maxim Group, LLC and Jesup & Lamont Securities Corp. to solicit customers to purchase SOI securities. These bribes were made with the intent to artificially increase the price of SOI securities and to artificially support trading volumes of SOI securities. Further, Defendant SOI and its former CEO entered into numerous sham consulting agreements to conceal payment of bribes from the investing public.
On June 24, 2008, the Court entered the Order signed by U.S. District Judge William L. Osteen Jr., consolidating the action, appointing Mary Jane Beauregard as lead plaintiff for the class and approving lead plaintiff's selection of the law firms Kahn Gauthier Swick, LLC, and Brower Piven as lead counsel. On September 8, 2008, the lead plaintiff filed an amended complaint against all defendants. On September 18, 2008, the lead plaintiff filed a Corrected Class Action Complaint.
Prior to any response from the defendants on the Corrected Class Action Complaint, the parties engaged in mediation proceedings. On June 21, 2010, a Stipulation and Agreement of Partial Class Settlement was filed, settling claims against certain defendants. The partial settlement consists of a principal amount of $462,500 in cash, plus any interest earned thereon, and 1,500,000 freely tradeable shares of Smart Online common stock. The settlement is subject to Court approval.
On October 25, 2010, Defendant Sherb & Co., LLP filed a motion to dismiss. On December 9, 2010, the Court administratively terminated the action as to Defendant Jesup & Lamont Securities Corporation due to pending bankruptcy proceedings. On January 13, 2011, the settlement was preliminarily approved. The final settlement hearing was set for May 11, 2011. On July 1, 2011, Judge William L. Osteen Jr. signed the Final Judgment and Order of Partial Dismissal With Prejudice. The settlement was approved.