SearchMedia Holdings Limited Investor Files Lawsuit
JANUARY 2012 - According to the Notice:
IF YOU: (i) PURCHASED OR OTHERWISE ACQUIRED IDEATION ACQUISITION CORP. OR SEARCHMEDIA HOLDINGS LIMITED SECURITIES BETWEEN APRIL 1, 2009 AND AUGUST 20, 2010; OR (ii) HELD IDEATION ACQUISITION CORP. COMMON STOCK AS OF OCTOBER 2, 2009 AND WERE ELIGIBLE TO VOTE AT IDEATION’S OCTOBER 27, 2009 SPECIAL MEETING, YOU COULD GET A PAYMENT FROM A CLASS ACTION SETTLEMENT.
Statement of Class Recovery
Pursuant to the Settlement described here and in the Stipulation and Agreement of Partial Settlement, a Cash Settlement Amount in the amount of $2,750,000 has been established, and will be deposited into the Settlement Fund. Lead Counsel estimate that there were approximately 9,184,445 shares of Ideation common stock which were eligible to vote on the merger and which therefore allegedly may have been damaged. Lead Counsel estimates that the average recovery under the Settlement is $0.30 per allegedly damaged Ideation share, before the deduction of Court-approved costs, expenses and attorneys’ fees. A Class Member’s actual recovery will be a proportion of the Net Settlement Fund determined by that Class Member’s Recognized Claim as compared to the total Recognized Claims of all Class Members who submit valid Proofs of Claim.
Statement of Potential Outcome of Case
Lead Counsel and Settling Defendants’ Counsel disagree on both liability and damages, and do not agree on the amount of damages that would be recoverable if the Class were to have prevailed on each claim alleged. The Settling Defendants deny that they are liable to the Class and deny that the Class has suffered any loss. While Lead Counsel believe that the Class has meritorious claims, they recognize that there are significant obstacles to be overcome before there could be any recovery against the Settling Defendants.
Reasons for the Settlement
Lead Counsel believe that the proposed partial Settlement is an excellent recovery and is in the best interests of the Class. Because of the risks associated with continuing to litigate the claims against the Settling Defendants and proceeding to trial against the Settling Defendants, there was a danger that the Class would not have prevailed on any of its claims against the Settling Defendants, in which case the Class would have received nothing from the Settling Defendants. The amount of damages recoverable by the Class from the Settling Defendants was and is challenged by the Settling Defendants. Recoverable damages in this case are limited to losses caused by conduct actionable under applicable law and, had the case gone to trial, the Settling Defendants would have asserted that all or most of the Class Members’ losses were caused by others or by non-actionable market, industry or general economic factors. For the Settling Defendants, who deny all allegations of wrongdoing or liability asserted against them, the principal reason for the Settlement is to eliminate the expense, risks, and uncertain outcome of the litigation.
NOVEMBER 2011 - A tentative partial settlement for the class action lawsuit against SearchMedia Holdings is reached.
SEPTEMBER 2010 - An investor in SearchMedia Holdings Limited (AMEX:IDI) filed a lawsuit against SearchMedia Holdings alleging violations of federal securities laws.
SearchMedia Holdings Limited, formerly Ideation Acquisition Corp, located in Beverly Hills, California, is a blank check company formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition or other similar business combination, one or more businesses. On October 30, 2009, Ideation Acquisition Corp completed the acquisition of SearchMedia International Limited (a purported nationwide multi-platform media company in China) and changed its name to SearchMedia.
According to the complaint the plaintiff alleges that SearchMedia and certain of its officers and directors violated the Securities Exchange Act of 1934. Specifically, the complaint alleges that SearchMedia Holdings Limited issued material misstatements and/or omissions in the joint proxy statement and prospectus dated October 5, 2009, and other public statements between April 1, 2009 and August 20, 2010 related to the acquisition of SearchMedia International Limited by Ideation Acquisition Corp and SearchMedia International Limited.
Then on August 20, 2010, SearchMedia Holdings Limited announced that the historical financial statements of SearchMedia International Limited for the 2007 and 2008 fiscal years would have to be restated and that the financial statements from these periods should no longer be relied upon. SearchMedia Holdings Limited also indicated that it estimated that revenue in 2007 and 2008 had been overstated by approximately $6 million and $25 million, respectively. Upon this news, so the lawsuit, Holdings Limited’s stock fell nearly 23%, to close on August 20, 2010, at $2.62 per share. Over the next few days, SearchMedia's stock continued to decline and closed at $1.70 per share on August 23, 2010, a 50% decline from the closing price of $3.40 per share on August 19, 2010. SearchMedia Holdings Limited shares (IDI) traded recently at $2.41 per share, down from its 52weekHigh of $8.71 per share.