According to the law firm press release, KIT digital and certain of its senior executives are charged with issuing a series of materially false and misleading statements, during the Class Period, in violation of federal securities laws.
During the class period, KIT digital was engaged in acquiring and purportedly integrating companies that were in the business of marketing end-to-end technology platforms for IP based video content providers. Under the leadership of the Chairman and Chief Executive Officer, from May 2008 to May 2011, KIT digital acquired over a dozen other companies, using cash raised through equity sales and stock as acquisition currency. As a result of its purported success, KIT digital reported "record" setting financial results, and repeatedly upgraded its financial guidance, throughout the Class Period.
The action charges that, on May 3, 2012, investors ultimately learned that KIT digital was operating far below guidance, and that the success of the integration and administration of its purchased assets had been overstated, and that the true costs of integrating and administering these acquisitions was understated.
Based on the disparity between prior guidance and KIT digital's announced results for 1Q:12, on May 3, 2012, its shares declined precipitously - - falling to an intra-day low of $4.12 per share, compared to the prior day's close of $6.34 per share, on May 2, 2012.
It was only at that time that investors first learned that: (i) KIT digital was not achieving its projected growth in earnings and revenues; (ii) the effectiveness of the integration of purchased companies had been materially overstated; (iii) KIT digital had materially overstated its foreseeable growth and profitability, and had falsely stated that the Company was poised to achieve significant financial success; and (iv) it was not true that KIT digital contained adequate systems of controls, such that KIT digital's representations and reports were true, accurate and reliable.
On May 3, 2012, the Wall Street Journal published a critical report on KIT digital that concluded that the former CEO and board Chairman who unexpectedly resigned in April 2012, had "left a mess" at the Company. The Journal also reported that KIT digital's new CEO, would not endorse prior guidance.
On September 28, 2012, the Court issued an Order consolidating cases, appointing lead plaintiff, and approving the selection of lead counsel.
On January 3, 2013, the Court issued an Order consolidating cases. It was ordered that all filings in connection with the consolidated action be docketed against the remaining lower number cases, 12 civ. 4199. The Clerk of Court was directed to close the referenced higher numbered cases, 12 civ. 5446 and 12 civ. 8732, as separate actions and remove them from the Court's docket. The Court issued another Order consolidating cases on January 4. It was ordered that all filings in connection with the consolidated action be docketed against the remaining lower numbered case, 12 Civ. 4199; and it was ordered that the Clerk of Court close the referenced higher numbered case, 12 Civ. 9210 as a separate action and remove it from the Court's docket.
On February 6, 2013, the Court ordered that Houston Municipal Employees Pension System, et al. v. Kit Digital Inc., et al. and MK Capital v. KIT Digital, Inc., et al. be consolidated for all pretrial purposes.
On March 13, 2013, the Court granted the appointment of Houston Municipal Employees Pension System
("HMEPS" ) as Lead Plaintiff, granted the motion of HMEPS for appointment the law firm of Bernstein Liebhard LLP as Lead Counsel for the class, and denied the motion of Robert McHardy for appointment of lead plaintiff and lead
On July 30, 2013, the parties entered into a Stipulation of Settlement. The Settlement was preliminarily approved by the Court on September 24. On December 20, 2013, the Court issued an Order granting final approval of the Settlement and awarding attorneys' fees and expenses.