CardioNet "Offerings" Class Action

You must submit the settlement "Proof" form attached below, in order to participate in this settlement. There is a strict deadline of April 27, 2012 by which all claims must be submitted. The instructions for submitting are included in the "Proof" and the "Notice" files attached below for your download. DO NOT SEND THE FORMS TO THE SHAREHOLDERS FOUNDATION, FOLLOW THE DIRECTIONS IN THE "PROOF".

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Company Name(s): 
CardioNet
Case Name: 
CardioNet Shareholder Class Action
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Proposed
Affected Securities
NASDAQ: BEAT
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Court of Filing: 
Superior Court for the State of California
Date Settled: 
06/22/2012
Settlement Amount: 
$7,250,000
Deadline to Participate in Settlement: 
04/27/2012
Settlement Notice: 
Settlement Proof: 
Summary: 

MARCH 2012 - According to the Notice:

NOTICE OF SETTLEMENT OF CLASS ACTION
TO: ALL PERSONS WHO PURCHASED OR ACQUIRED CARDIONET, INC. (“CARDIONET” OR THE “COMPANY”) COMMON STOCK PURSUANT AND/OR TRACEABLE TO THE COMPANY’S REGISTRATION STATEMENTS AND PROSPECTUSES, AS AMENDED, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH CARDIONET’S MARCH 25, 2008 INITIAL PUBLIC OFFERING AND/OR ITS AUGUST 6, 2008 SECONDARY STOCK OFFERING.

WHAT IS THE MONETARY VALUE OF THE PROPOSED SETTLEMENT?
The Settlement, if approved, will result in the creation of a cash settlement fund in the amount of $7,250,000 (the “Settlement Fund”). The Settlement Fund, plus accrued interest and minus the costs of this Notice, attorneys’ fees and expenses, the reimbursement of Plaintiff’s cost and expenses, and administrative costs as approved by the Court, will be distributed to Class Members pursuant to the Plan of Allocation that is described in the next section of this Notice.

The Allegations.
On March 5, 2010, Plaintiff commenced this putative class action (the “Action”) against Defendants for violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“1933 Act”), with respect to the dissemination of allegedly false and misleading statements in the registration statements and prospectuses, as amended (collectively, the “Registration Statements”) filed with the Securities and Exchange Commission (“SEC”) in connection with CardioNet’s March 25, 2008 initial public offering (“IPO”) and its August 6, 2008 secondary stock offering (“Secondary Offering”) (collectively, the “Offerings”).2 Plaintiff filed its Amended Complaint on March 10, 2010 (“AC”).

In the AC, Plaintiff alleged that Defendants violated the 1933 Act by making material misstatements and omissions in the Registration Statements. More specifically, Plaintiff alleged that the Registration Statements used to conduct the Offerings were false and misleading in that they concealed that prior to the Offerings, CardioNet had been: (i) reporting improperly obtained revenues; (ii) implementing aggressive sales tactics; (iii) understating reimbursement risk; (iv) concealing negative communications with regulators; and (v) overstating CardioNet’s future sales and profit margin growth potential. Plaintiff further alleged that as a result of the material misrepresentations and omissions in the Registration Statements, the price of CardioNet’s stock was artificially inflated at the time the Registration Statements became effective, and that the members of the Class purchased CardioNet common stock at artificially high prices. Plaintiff alleged that when the true state of CardioNet’s business and operations was finally revealed, CardioNet’s stock price fell, resulting in damage to the Class. Defendants deny Plaintiff’s allegations, and have vigorously defended the litigation.3

The Court has not ruled as to whether Defendants are liable to Plaintiff or to the Class. This Notice is not intended to be an expression of any opinion by the Court with respect to the truth of the allegations in this lawsuit or the merits of the claims or defenses asserted. This Notice is solely to advise you of the pendency of the Action and proposed Settlement thereof and your rights in connection with that Settlement.

WHAT IS THIS LAWSUIT ABOUT?
Status of the Case.

This Action was filed in the Superior Court of California, County of San Diego. On March 10, 2010, Plaintiff filed the AC. On April 5, 2010, Defendants removed the Action to federal court, claiming that the Securities Litigation Uniform Standards Act deprived the state court of subject matter jurisdiction. Plaintiff sought to remand the Action, and on March 24, 2011, U.S. District Court Judge Lorenz granted Plaintiff’s motion. See West Palm Beach Police Pension Fund v. CardioNet, Inc., No. 10cv711–L(NLS), 2011 WL 1099815 (S.D. Cal. March 24, 2011).
The Issuer Defendants and Underwriter Defendants each filed a demurrer

The Issuer Defendants and Underwriter Defendants each filed a demurrer on May 12, 2011. On September 1, 2011, Judge Lewis entered a tentative ruling overruling the Defendants’ demurrer in its entirety. The Parties appeared at the September 2, 2011 hearing, and Judge Lewis affirmed her tentative ruling and overruled Defendants’ demurrer. The Court also ordered Defendants to answer the Complaint within fourteen days, to begin to respond immediately to the discovery Plaintiff had previously served, and set the matter for trial on June 15, 2012. In addition, Judge Lewis ordered the Parties to mediate the case, and ordered that the Parties report back to her if they were unable to reach a resolution.

On September 16, 2011, Defendants filed their Answers. Defendants denied that they violated any laws, made any misstatements or omissions, or committed any improper acts or wrongdoing whatsoever, and they asserted numerous defenses.

In accordance with Judge Lewis’ order, the Parties agreed to mediate the case before the Hon. Layn R. Phillips, U.S. District Court Judge (Ret.). The mediation was held on November 10, 2011. Although the Parties did not reach agreement on November 10, 2011, Judge Phillips continued to work with the Parties to resolve the matter. On or about December 9, 2011, the Parties reached an agreement to settle this Action on the basis set forth in the Stipulation, the material terms of which are described herein.

Defendants have denied, and continue to deny, that they did anything wrong.