The original class action lawsuit was commenced on behalf of a class of all persons who purchased or acquired shares of common stock of Global Cash Access Holdings, Inc., pursuant or traceable to the Company's initial public offering which commenced on September 22, 2005, and who held such shares of GCA common stock until November 14, 2007. The claims asserted arise under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, respectively 15 U.S.C. 77k, 77l(a)(2) and 77o, and have been asserted against: GCA; current and former directors; controlling shareholders M&C International and Summit Partners, L.P.; and underwriters Goldman Sachs & Co., Inc. and JP Morgan Securities Inc.
The complaint alleges that: (a) the Company's internal controls were deficient causing its finance and accounting departments to be unable to accurately calculate the amount of commissions payable to the Company's customers; (b) GCA had improperly computed the amount of commissions it was required to pay many of its customers resulting in the Company failing to comply with contractual terms; and (c) GCA's expenses (i.e. cost of revenues) during 2005 were understated resulting in an overstatement of gross profit margins and net income. The subsequent disclosure of these facts resulted in the decline of the Company's common stock price, causing Plaintiff and the other members of the Class to suffer damages.
On June 26, 2008, the Court entered the Opinion and Order #96177, signed by U.S. District Judge Shirley Wohl Kram, consolidating two actions under the caption "In re Global Cash Access Holdings, Inc. Securities Litigation, Master file No. 08-Cv-3516 (SWK). Further, according to the Order, the City of Richmond Retirement Systems is appointed lead plaintiff and the law firm of Grant & Eisenhofer, P.A., is appointed lead counsel. On August 18, 2008, the lead plaintiff filed a Consolidated Class Action Complaint.
On September 18, 2008, the Court issued the Opinion and Order #96522 granting the defendants’ June 6, 2008 motion to transfer the case. According to the Order, the Court agrees that U.S. District Court for the District of Nevada is a superior forum for this litigation and the case was transferred from the Southern District of New York to the District of Nevada.
On November 14, 2008, the defendants filed three motions to dismiss the Consolidated Class Action Complaint. On June 29, 2009, Judge James C. Mahan denied those motions. On February 17, 2010, a Stipulation and Agreement of Settlement was filed.
According to an article dated March 16, 2010, Global Cash Access Holdings, Inc., the gaming industry’s payments leader, announced that it has reached a settlement with the plaintiffs of all issues raised in the federal securities class action lawsuit originally filed on April 11, 2008. The securities class action was commenced by a stockholder against certain of the Company’s current and former directors, the Company’s former chief executive officer, former chief financial officer and certain other defendants. The parties have executed a Stipulation of Settlement that provides for the establishment of a $5.85 million settlement fund in exchange for the dismissal with prejudice of all claims against all defendants in the litigation.
On March 17, 2010, Judge James C. Mahan preliminarily approved the settlement. The final settlement hearing was set for June 25, 2010, and on that day, the settlement was approved. Court found in favor of plaintiff for $1,057,500 in attorneys fees, and $129,904.39 in expenses. The action is now dismissed with prejudice.