According to a press release dated October 01, 2010, the complaint charges FalconStor and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company develops, manufactures and sells network storage software solutions in the United States and internationally. It also provides related maintenance, implementation, and engineering services.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and its prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company was experiencing weak demand for its products and services; (ii) that the Company was making improper payments to secure a contract with at least one of the Company’s customers; and (iii) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.
Then, on September 29, 2010, FalconStor announced that ReiJane Huai “resigned from all of his positions with the Company, effective immediately.” The press release stated that Mr. Huai “tendered his resignation following his disclosure that certain improper payments were allegedly made in connection with the Company’s contract with one customer.” In reaction to Mr. Huai’s resignation and the revelation of improper payments to a certain customer, shares of the Company’s stock fell $0.91 per share, or 22%, to close at $3.15 per share, on unusually heavy trading volume.
It was Ordered that case number 10-CV-4632 be consolidated into lead case number 10-CV-4572. It was Ordered that case number 10-CV-4632 be administratively closed and all further entries be made on the lead case.
On August 29, 2011, the Court granted the motion for the appointment of Lead Plaintiff and Lead Counsel in this case.
On May 6, 2013, the parties entered into a Stipulation of Settlement. On November 1, the Court preliminarily approved the Settlement. On May 8, 2014, the Court adopted the Report and Recommendations of the US Magistrate Judge, granting approval of the Settlement.