Arotech Corporation (NASDAQ: ARTX) Investor Securities Class Action Lawsuit 03/23/2007

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Company Name(s): 
Arotech Corporation
Case Name: 
Arotech Corporation Shareholder Class Action Lawsuit 03/23/2007
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
Class Period Begin: 
Class Period End: 
Court of Filing: 
U.S. District Court for the Eastern District of New York
Date Settled: 
Settlement Amount: 
Deadline to Participate in Settlement: 

June 23, 2010 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys’ fees and expenses, and dismissed the action with prejudice.

January 22, 2010 - The court preliminarily approved the settlement.

January 7, 2010 - Parties filed a stipulation of settlement.

March 30, 2009 - The court denied the defendants' motion to dismiss.

February 28, 2008 - The defendants filed a motion to dismiss.

September 28, 2007 - The lead plaintiffs filed an amended consolidated complaint.

July 2, 2007 - The lead plaintiffs and lead counsel were appointed and all cases were consolidated.

June 5, 2007 - Lead plaintiff motions were filed.

June 4, 2007 - The plaintiff that filed the original complaint filed a notice of voluntary dismissal.

May 3, 2007 - Another investor filed a complaint in the U.S. District Court for the Eastern District of New York on behalf of investors who purchased Arotech Corporation (NASDAQ: ARTX) common shares between November 9, 2005 and November 14, 2005.

March 23, 2007 - An investor in shares of Arotech Corporation (NASDAQ: ARTX) filed a lawsuit in the U.S. District Court for the Eastern District of Michigan against Arotech Corporation over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between March 31, 2005 and November 14, 2005.

The complaint alleges that defendants, Arotech Corporation and certain of its officers and/or directors, published a series of materially false and misleading statements that defendants knew and/or recklessly disregarded were materially false and misleading at the time of such publication, and that omitted to reveal material information necessary to make defendants’ statements, in light of such material omissions, not materially false and misleading.

Between March 31, 2005 and November 14, 2005, Arotech Corporation presented itself as a company that was adept at managing and integrating acquired assets (such as Armour of America, which it acquired in August 2004 at a cost of approximately $22 million), and a company that was achieving organic growth. Moreover, throughout that time, defendants repeatedly stated that Arotech Corporation maintained systems, procedures and controls that foreseeably would allow it to achieve remarkable year-over-year “record” quarterly revenue growth as high as 40%.

Defendants’ representations concerning Arotech Corporation’s business, management capabilities, systems and controls, and strength and profitability were either knowingly false when made or defendants recklessly disregarded known, material adverse facts at the time the statements were made. In reality the company was suffering from a host of undisclosed adverse factors that were negatively impacting Arotech Corporation’s business and that would foreseeably cause it to report declining financial results - - materially less than the market expectations defendants had caused and cultivated.

The truth eventually came out that the company was operating far below expectations and that Arotech Corporation had significantly under-reserved for its impaired assets. These sudden and shocking disclosures, first reported on November 14, 2005, had an immediate impact on the price of Arotech Corporation stock. Accordingly, the following day, on November 15, 2005, shares of Arotech Corporation (NASDAQ: ARTX) declined almost 27% in the single trading day.