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Information technology services industry

Class Action Lawsuit Filed Against FindWhat.com over Allegations of Securities Violations

Strategic Insights

— 1 min read

A class action lawsuit has been filed in the U.S. District Court for the Middle District of Florida on behalf of shareholders who purchased FindWhat.com securities between January 5, 2004, and May 4, 2005. The lawsuit alleges that FindWhat, along with several of its executives, failed to disclose and misrepresented several key financial issues, including the goodwill impairment resulting from a merger, the company's violation of Generally Accepted Accounting Practices, and the lack of necessary internal controls. As a result, FindWhat's financial results were materially inflated, and the company's stock price plummeted after the allegations were made public.

Key Takeaways:

  • A class action lawsuit was filed in the U.S. District Court for the Middle District of Florida on behalf of FindWhat.com shareholders who purchased securities between January 5, 2004, and May 4, 2005.
  • The lawsuit alleges that FindWhat, along with executives Craig Pisaris-Henderson, Brenda Aguis, Frederick E. Guest, and Phillip R. Thune, violated the Securities and Exchange Act of 1934 by failing to disclose and misrepresenting several key financial issues.
  • The defendants are accused of failing to appropriately acknowledge goodwill impairment resulting from a merger, revealing that the company had been actively seeking new accountants since January 2005, violating Generally Accepted Accounting Practices, and lacking necessary internal controls.
  • FindWhat's financial results were materially inflated, and the company's stock price plummeted after the allegations were made public.
  • Ernst and Young LLP, FindWhat's accountants, resigned on May 2, 2005, and the company announced an adjustment in its consolidated financial statements for 2004 relative to recognition of goodwill impairment.
  • On May 4, 2005, FindWhat announced the resignation of its CFO, Brenda Aguis, which caused the company's stock price to plummet an additional 38% on May 5, 2005.

Statistics:

  • FindWhat's stock price fell $2.04 per share, or 26%, on May 3, 2005.
  • On May 4, 2005, FindWhat's stock price plummeted an additional $2.33 per share, or 38%, to close at $5.71 per share.
  • The lawsuit alleges that shareholders may have sustained damages between January 5, 2004, and May 4, 2005.

Sources:

  • Mager White & Goldstein, LLP
  • PRIMEZONE via COMTEX (May 16, 2005)
  • News Provided by COMTEX (http://www.comtexnews.com)

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