DJSP Enterprises, Inc Hit by Investor Lawsuit Over Alleged Securities Law Violations

SEPTEMBER 2011 - Securities class action against DJSP Enterprises, Inc was dismissed. The U.S. District Judge said the lawsuit filed by hedge funds and others did not meet the pleading standards set by Congress in the Private Securities Litigation Reform Act of 1995 to sustain the securities fraud claims.

JULY 2010 - An investor in DJSP Enterprises, Inc (NASDAQ:DJSP) securities filed a lawsuit in the United States District Court for the Southern District of Florida against DJSP Enterprises over alleged violations of Federal Securities Laws.

DJSP Enterprises, Inc., located in Plantation, Florida, through its subsidiary, DAL Group, LLC, engages in providing non-legal services supporting residential real estate foreclosure, other related legal actions, and lender owned real estate services in the United States.

According to the complaint the plaintiff alleges that DJSP Enterprises and certain of its officers violated the Securities Exchange Act of 1931 by issuing between March 16, 2010 and May 10, 2010, material misrepresentations and by failing to disclose material adverse facts about its true financial condition, business and prospects.

DJSP Enterprises, Inc reported in 2009 Total Revenue of $260.269million with a Net Income of $44.565million. According to the investigation by a law firm the investigation on behalf of investors in DJSP stock focuses on the following events. On May 28, 2010, DJSP Enterprises declined by $2.59, or 29.2%, to $6.28 after DJSP Enterprises posted weaker-than-expected first-quarter results and warned investors of a full-year earnings shortfall. DJSP Enterprises said it had a first-quarter adjusted profit of 35 cents a share, which was a nickel below the Thomson Reuters average estimate.

DJSP Enterprises said that in April one of its largest bank clients initiated a foreclosure system conversion that cut the number of foreclosures. Because of the foreclosure system conversion and the U.S. government’s steps to prevent foreclosures, DJSP Enterprises said it expects full-year earnings of $1.29 to $1.36 a share, which is below consensus. According to the complaint, on May 27, 2010, DJSP Enterprises shocked the market by lowering its guidance for adjusted net income by $15 million to $17 million and for adjusted EBIDTA by $18 million to $22 million. DJSP attributed the lowered guidance to, (i) the foreclosure system conversion of one of its largest bank clients in April 2010, which resulted in a reduction in the referral of foreclosures filed; and (ii) a temporary slowdown in foreclosures due to governmental intervention programs. DJSP's Executive Vice President and CEO explained that the reason this information was not conveyed to shareholders back in April 2010, was due to a belief that these issues would fix themselves. Shares of DJSP Enterprises, Inc (DJSP) traded recently at $3.25 per share, down from its 52weekHigh of $13.65 per share.