According to a press release dated August 14, 2009, the complaint alleges that Defendants' material omissions and dissemination of materially false and misleading statements concerning the Company's financial condition, cash management and internal controls caused the Company's stock price to become artificially inflated, inflicting damages on investors. MIND engages in the development, manufacture and marketing of billing and customer care software and the sale of related services for various types of communication providers, including traditional cable and wireless, Internet protocol or VOIP and broadband IP network operators. The Complaint alleges that Defendants knew or recklessly disregarded and concealed from the investing public that: (a) most of MIND's reported cash position comprised illiquid Auction Rate Securities ("ARSs"), and (b) internal controls over the monitoring, accounting and reporting of the Company's investment in cash equivalents and\or short-term investments were materially deficient.
The Complaint further alleges that Defendants misrepresented the Company's liquidity and its ability to attract customers, finance current operations, and pursue strategic acquisitions. In a Form 20-F filed with the SEC, Defendants later admitted that because "the stated maturity of these securities is 2046" and "there is currently a very limited market for these auction rate securities... this situation leaves us with limited cash resources with which to pursue our acquisition strategy." Defendants ultimately restated the Company's financial statements for 2006, and disclosed that almost $23 million of the Company's originally reported $27 million liquid cash position was invested in highly illiquid ARSs. Defendants also admitted that, "In connection with restatement, management determined that a material weakness in internal control over financial reporting existed as of December 31, 2006 because at that time we did not have effective controls designed and in place to ensure that our investments were classified in accordance with generally accepted accounting principles."
On October 23, 2009, Judge Richard M. Berman granted the motion to appoint Sarit Tomar as Lead Plaintiff and approved Lead Plaintiffs selection of Federman & Sherwood as Lead Counsel. On November 23, 2009, the lead plaintiff filed a First Amended Class Action Complaint For Violations of the Federal Securities Laws. On January 29, 2010, the defendants filed a motion to dismiss the First Amended Class Action Complaint. On July 2, 2010, Judge Richard M. Berman granted the defendants’ motion to dismiss and the case was closed.