Home Solutions of America Inc. Case 11/21/2007

Case Update - 05/06/2009

Before the defendants filed an answer to the complaint, a Joint Motion for Preliminary Approval of Class Action Settlement was filed on March 12, 2009. The proposed settlement is in the amount of $5,100,000 in cash. On April 10, 2009, Judge David C. Godbey preliminarily approved the settlement. A Settlement Hearing is scheduled for June 15, 2009, to determine, among other things, whether the proposed Settlement should be finally approved as fair, reasonable and adequate, and the Litigation therefore dismissed on the merits with prejudice.

Original Post - 11/24/2008

According to a law firm press release, on November 21, 2007, a lawsuit seeking class action status in the United States District Court for the Northern District of Texas has been filed on behalf of all persons who purchased or otherwise acquired the common stock of Home Solutions of America, Inc.
 
The Complaint charges that HSOA and certain of its officers and directors violated federal securities laws. Specifically, the Complaint alleges that throughout the Class Period, Defendants made false and misleading statements concerning construction contracts for projects at three sites in New York, including Manhattan, and a site in Florida. Unbeknownst to investors, Defendants failed to disclose the following: (i) HSOA did not have an agreement with Blue Diamond Construction to perform construction with respect to at least one of the three New York sites Defendants had previously identified; and (ii) that the party that had reportedly awarded the Florida contract to HSOA was a party related to HSOA.
 
On August 15, 2007, HSOA revealed that (i) the Florida project was a related party transaction; (ii) that in July HSOA had “received informal inquiries from the SEC and Nasdaq with respect to prior disclosure and related issues;” and (iii) that management had requested that the audit committee perform an investigation into related party transactions and disclosures. Then, on September 27, 2007, Defendants acknowledged that they did not have a contract for the Manhattan element of the New York projects. Finally, on November 14, 2007, HSOA announced that it would delay the filing of its third quarter financial results, citing its “voluntary review of related party transactions.” On this news, HSOA’s stock dropped over 20% to close at $1.57 per share on November 15, 2007.