The original complaint charges the Company’s Executive Vice President and Chief Financial Officer with violations of the Securities Exchange Act of 1934. Hovnanian engages in building residential homes in the United States. It designs, constructs, markets, and sells single-family detached homes, attached townhomes and condominiums, mid-rise and high-rise condominiums, urban infill, and adult homes.
Specifically, the alleges that during the Class Period, the defendant issued materially false and misleading statements regarding the Company's business and prospects. As a result of these misleading statements, Hovnanian stock traded at artificially inflated prices during the Class Period, reaching a high of $54.29 per share in January 2006.
As a result of defendant's misleading statements and failure to disclose, Hovnanian stock traded at inflated levels during the Class Period. However, as a direct result of the market learning of defendant's wrongdoing,the price of Hovnanian shares declined and plaintiff and the class suffered a loss on their investment in Hovnanian.
On January 31, 2008, Judge Otis D. Wright II granted the motion to appoint Herbert Mankofsky as lead plantiff and approved lead plaintiff’s selection of Glancy Binkow &
Goldberg LLP as lead counsel. On February 25, 2008, the case was transferred from the U.S. District Court for the Central District of California to the U.S. District Court for the District of New Jersey. The lead plaintiff filed an Amended Complaint on March 10, 2008, against Hovnanian's CFO and added the company, CEO and COO as named defendants in the action. The defendants filed motions to dismiss in July 2008. On March 31, 2009, the Court entered the Stipulation and Order withdrawing the motions to dismiss. On June 12, 2009, the lead plaintiff filed a Second Amended Complaint.
On September 11, 2009, a Motion for Settlement Preliminary Approval of Class Action Settlements was filed. The proposed settlement is in the amount of $4,000,000 in cash. On October 16, 2009, the Court preliminary approved the settlement. The Settlement Conference was held on December 15, 2009. At the hearing, Judge Susan D. Wigenton approved the settlement, approved the plan of allocation, approved attorneys' fees and expenses and dismissed the action with prejudice. The civil case is now terminated.