According to a law firm press release, the complaint charges that Syntax-Brillian, its CEO and (now former) CFO misled shareholders through false statements about the company's business prospects, operations, demand for the company's products, and adequacy of internal controls.
Defendant Syntax-Brillian Corporation is a designer, developer and distributor of high definition televisions (HDTVs) in liquid crystal display (LCD) and liquid crystal silicon (LCoS) formats. The Company's HDTVs operate under the brand name Olevia. In November 2006, Syntax acquired Vivitar Corporation. In the past two years, 2006-2007, it has reported explosive growth due largely to reportedly increased sales to a Chinese distributor South China House of Technology. The complaint alleges that throughout 2007, up to late August, the Company and defendants issued a series of increasingly bullish statements about the Company's sales and revenues and prospects and also selling stock on two occasions in the midst of the bullish revenue and profit guidance statements. Plaintiffs allege that Syntax stock price was buoyed by these statements in the $6-$7 range allowing Syntax to sell hundreds of millions of dollars of stock. On September 13, 2007, after disclosure of previously concealed omitted facts, including a failure of adequate accounting systems and an approximately 35% shortfall in previously anticipated revenues, the price of Syntax stock fell over 30% causing loss and damage to all purchasers of Syntax stock on the open market.
According to the docket, Syntax-Brillian filed a notice of Bankruptcy with the court on July 8, 2008. As a result, the class action was stayed against Defendant Syntax-Brillian with an order of dismissal planned for September 15, 2008 unless the bankruptcy court judge lifts the stay prior to the dismissal date.
Plaintiffs filed the first Amended Consolidated Complaint on August 25, 2008 dropping the company as a defendant and adding certain officers and the former Chairman of the Audit Committee to the defendant list. Defendants filed motions to dismiss the complaint on October 15, 2008.
In January 2009, the lead plaintiff filed a motion and the an amended motion to certify the class. On February 4, 2009, Judge Frederick J. Martone issued the order granting in part and denying in part certain of the defendants’ motions to dismiss the complaint. The case entered into the discovery phase. On July 17, 2009, Judge Frederick J. Martone granted the plaintiff’s amended motion to certify the class.
On September 8 and 17, 2009, the defendants filed motions for summary judgment. Before any ruling on the motions, on November 3, 2009, the plaintiffs filed a motion for preliminary approval of a class action settlement. According to the Stipulation and Agreement of Settlement, the Underwriter Defendants shall pay or cause to be paid the sum of $2,750,000 in cash, the Individual Defendants shall cause Syntax's directors and officers insurance carriers to pay the sum of $4,750,000 in cash, and Grobstein, Horwath & Company LLP shall pay or cause to be paid the sum of $2,500,000 in cash. On November 9, 2009, Judge Frederick J Martone preliminarily approved the settlement. The Settlement Hearing is scheduled for February 12, 2010.
On January 11, 2010, an objection was filed to the proposed class action settlement, but on February 18, 2010, Judge Frederick J. Martone approved the settlement as set forth in the Stipulation and dismissed the action with prejudice. Judge Martone also signed the orders approving the plan of allocation and awarding attorneys’ fees and expense. According to the Order, the Court awards Lead Counsel attorneys' fees of 25% of the Settlement Fund and expenses in an aggregate amount of $1,086,705.67, together with the interest earned thereon for the same time period and at the same rate as that earned on the Settlement Fund until paid.