ValueClick Inc. Case 08/17/2007
ValueClick Inc. Case 08/17/2007: UPDATE
According to a notice from August 20, 2009, a settlement for $10 million in cash has been proposed in the above-captioned certified class action. A hearing will be held before the Honorable Dean D. Pregerson, at the United States District Court for the Central District of California, Western Division, 312 North Spring Street, Los Angeles, California 90012, at 10:00 a.m., on November 9, 2009 to determine whether the proposed settlement should be approved by the Court as fair, reasonable, and adequate, and to consider the application of Plaintiffs’ Counsel for attorneys’ fees and reimbursement of expenses.
According to a press release dated August 17, 2007, the complaint charges ValueClick and certain of its officers and directors with violations of the Securities Exchange Act of 1934. ValueClick describes itself as “one of the world’s largest integrated online marketing companies, offering comprehensive and scalable solutions to deliver cost-effective customer acquisition for advertisers and transparent revenue streams for publishers.”
Specifically, the complaint alleges that during the Class Period, defendants issued false and misleading statements concerning ValueClick’s sales growth, record reported revenues and earnings, strong business fundamentals, and upward earnings guidance. As a result of these false and misleading statements, ValueClick’s stock rose precipitously, reaching a Class Period high of over $35 per share by May 2007. Meanwhile, defendants concealed from investors that ValueClick’s stellar financial performance was due in large part to illegal practices, which when halted (voluntarily or through a regulatory enforcement action) would adversely impact ValueClick’s lead-generation business, the Company’s revenues and its profits
The Complaint further alleges that on May 18, 2007, the Company announced that it was the target of an investigation by the FTC into potential FTC Act or CAN-SPAM Act violations. Yet defendants maintained that ValueClick was in full compliance with the law and that the FTC investigation would not negatively impact the Company’s forward financial performance. Nonetheless, according to the complaint, the Company’s promotional lead-generation business dropped off dramatically during May and June of 2007, significantly impacting the Company’s ability to achieve its inflated financial targets.
Then, on July 30, 2007, the Company reported second quarter 2007 earnings which fell short of defendants’ forecasts. The Company also lowered its forward financial guidance for the year. On this news, ValueClick’s stock plummeted over $6 per share, falling below $20 per share in intraday trading, or 42% from its Class Period high, on very high volume.