The original Complaint charges that HSOA and certain of its officers and directors violated federal securities laws. Specifically, the Complaint alleges that throughout the Class Period, Defendants made false and misleading statements concerning construction contracts for projects at three sites in New York, including Manhattan, and a site in Florida. Unbeknownst to investors, Defendants failed to disclose the following: (i) HSOA did not have an agreement with Blue Diamond Construction to perform construction with respect to at least one of the three New York sites Defendants had previously identified; and (ii) that the party that had reportedly awarded the Florida contract to HSOA was a party related to HSOA.
On August 15, 2007, HSOA revealed that (i) the Florida project was a related party transaction; (ii) that in July HSOA had "received informal inquiries from the SEC and Nasdaq with respect to prior disclosure and related issues;" and (iii) that management had requested that the audit committee perform an investigation into related party transactions and disclosures. Then, on September 27, 2007, Defendants acknowledged that they did not have a contract for the Manhattan element of the New York projects. Finally, on November 14, 2007, HSOA announced that it would delay the filing of its third quarter financial results, citing its "voluntary review of related party transactions." On this news, HSOA's stock dropped over 20% to close at $1.57 per share on November 15, 2007.
On April 2, 2008, the Court entered the Order granting the Johannesson Group's Motion for Appointment as Lead Plaintiffs and Approval of Class Action Counsel. According to the Order, the Johannesson Group is appointed to serve as Lead Plaintiff in this action. The law firm of Schatz Nobel Izard P.C. and Sarraf Gentile L.L.P. are hereby approved as Co-Lead Counsel for the prospective class. The law firm of Claxton & Hill, P.L.L.C. is hereby approved as Liaison Counsel for the prospective class. On May 29, 2008, an Amended Class Action Complaint was filed.
Before the defendants filed an answer to the complaint, a Joint Motion for Preliminary Approval of Class Action Settlement was filed on March 12, 2009. The proposed settlement is in the amount of $5,100,000 in cash. On April 10, 2009, Judge David C. Godbey preliminarily approved the settlement. A Settlement Hearing is scheduled for June 15, 2009, to determine, among other things, whether the proposed Settlement should be finally approved as fair, reasonable and adequate, and the Litigation therefore dismissed on the merits with prejudice.
On June 15, 2009, the Settlement Hearing was held before Judge David C. Godbey. According to the orders entered on June 16, 2009, the Court approved the settlement and dismissed the action with prejudice. The Court also awarded each of the Lead Plaintiffs $1,000, to be paid from the Settlement Fund. The co-lead counsel was awarded 22% of the Settlement Fund, plus reimbursement of costs and expenses in the amount of $30,309.03.