According to a press release dated July 21, 2010, the Complaint alleges that during the Class Period, DJSP and certain of its officers and/or directors (the "Defendants") violated the Securities Exchange Act of 1934 by issuing materially false and misleading statements and failing to disclose adverse facts known to them regarding the Company's business and financial results. As a result the stock traded at artificially inflated prices during the Class Period.
On March 16, 2010, DJSP informed the investing community that "...there is no stopping this inflow of continued defaults that we anticipate to go for another two or three years....foreclosure volumes through 2012 are expected to increase dramatically." Then on May 27, 2010, DJSP shocked the market when it lowered its guidance for adjusted net income by $15 to $17 million and for adjusted EBIDTA by $18 to $22 million. On this news, the Company's shares fell nearly 29%, opening on May 28, 2010 at $6.33 per share.
DJSP indicated that the lowered guidance was a result of (i) the foreclosure system conversion of one of its largest bank clients which resulted in a reduction in the referral of foreclosure files; and (ii) a temporary slowdown in foreclosures due to governmental intervention programs.
On October 6, 2010, the defendants filed a motion to dismiss the initial complaint.
By the Order signed by Magistrate Judge Robin S. Rosenbaum on November 24, 2010, the Court appoints Philadelphia Financial Management of San Francisco, LLC, to serve as lead plaintiff in this action, and approves lead plaintiff’s selection of Cuneo, Gilbert & LaDuca, LLP; Liddle & Robinson, LLP; and Shepherd, Finkelman, Miller & Shah, LLP, to serve as lead counsel. On January 10, 2011, the lead plaintiff filed a Consolidated Amended Complaint. The defendants responded by filing a motion to dismiss the Consolidated Amended Complaint.
On September 30, 2011, Judge William J. Zloch granted the defendants' motion to dismiss and signed the Final Order of Dismissal without Prejudice.