According to a press release dated January 30, 2009, the complaint alleges that the Company and senior management issued false and misleading financial statements in violation of the Securities Exchange Act of 1934.
Specifically, the complaint alleges that throughout the Class Period, Defendants issued financial statements which purported to state IBSG’s financial results, including revenues, net income, and assets, including cash on hand, in accordance with generally accepted accounting principles. However, on January 12, 2008, the last day of the Class Period, the truth was revealed that throughout the Class Period, IBSG’s financial statements contained material discrepancies, and could not be relied upon, and that the Company was commencing an investigation which could necessitate a restatement of IBSG’s financial statements, These material discrepancies included misstatements of IBSG’s recognized revenues and reported cash on hand. The material discrepancies in revenue recognition occurred despite the fact that substantially all the Company’s revenue came from just three key customers, and hence revenues could likely only be misstated deliberately or with reckless disregard of the true state of affairs.
Moreover, on the same date (Jan. 12, 2009), the Company announced the resignation of its new Chief Financial Officer-less than one week after the termination of IBSG’s CEO, and less than two weeks after the announcement of the resignation and replacement of its prior Chief Financial Officer. As a result, the price of IBSG’s common stock, which was artificially inflated by Defendants’ false statements throughout the Class Period, significantly declined, causing Plaintiff and the other members of the Class to suffer damages.
On June 1, 2009, one of the defendants filed a motion to dismiss or to transfer the action to the U.S. District Court to the Middle District of Florida. On July 7, 2009, the Court appointed Anthony Chiarenza, Jeffrey Bonvallat, and Pierce Lord as Lead Plaintiffs for the Class in this action. The Court approved the selection of Levi & Korsinsky, LLP as Lead Counsel in this action. In August 2009, the defendants filed a fully briefed motion to dismiss the Plaintiffs’ Complaint. On September 10, 2009, a Memorandum and Order was entered transferring the action from the U.S. District Court for the Eastern District of New York to the Southern District of Florida as case 1:09-cv-22736. On December 10, 2009, the defendants filed two motions to dismiss.
On May 28, 2010, the plaintiffs filed a motion to certify the class. According to the Order signed on July 16, 2010, the motion to certify the class is stricken. The plaintiff filed a motion for reconsideration of that order, which was denied on August 19, 2010. On September 1, 2010, Judge Seitz granted the defendants' motions to dismiss. Plaintiffs have until September 15, 2010, to file an amended complaint. On
October 8, 2010, the plaintiffs filed a First Amended Complaint, however, according to the complaint, this action is now being repleaded by Plaintiffs in their individual capacity. Plaintiffs reserve the right to reinstate their class claims if this Court or an appellate court permits Plaintiffs to do so at a later juncture.
On November 8, 2010, the individual plaintiff filed a Second Amended Complaint. Because class certification was denied, this action is repleaded by Plaintiff Chiarenza in his individual capacity. The plaintiff settled with certain defendants in an individual capacity, not part of shareholders. The action was dismissed with prejudice on March 1, 2011.