WorldSpace Inc (OTC: WRSPQ) Investor Securities Class Action Lawsuit 03/15/2007

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Company Name(s): 
WorldSpace
Case Name: 
WorldSpace Shareholder Class Action Lawsuit 03/15/2007
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
OTC: WRSPQ
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
03/15/2007
Class Period Begin: 
08/04/2005
Class Period End: 
03/16/2006
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
05/18/2007
Date Settled: 
09/06/2013
Settlement Amount: 
$2,375,000
Deadline to Participate in Settlement: 
05/08/2013
Settlement Notice: 
Settlement Proof: 
Summary: 

September 6, 2013 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys’ fees and expenses, and dismissed the action with prejudice.

January 25, 2013 - The court preliminarily approved the settlement.

November 21, 2012 - Parties filed a stipulation of settlement.

July 21, 2008 - The court denied the defendants' motion to dismiss.

October 9, 2007 - The defendants filed a motion to dismiss.

August 9, 2007 - The lead plaintiff filed an amended complaint on behalf of purchasers of WorldSpace Inc (OTC: WRSPQ) common stock between August 4, 2005 and March 16, 2006. The lead plaintiff alleges that the defendants violated the Securities Act of 1933 by issuing false and misleading statements between August 4, 2005 and March 16, 2006.

June 26, 2007 - The lead plaintiff and lead counsel were appointed.

May 15, 2007 - Lead plaintiff motions were filed.

March 15, 2007 - An investor in shares of WorldSpace Inc (OTC: WRSPQ) filed a lawsuit in the U.S. District Court for the Southern District of New York against WorldSpace Inc over alleged violations of Federal Securities Laws between August 4, 2005 and May 9, 2006.

The complaint alleges that WorldSpace Inc violated Section 11, 12(a)2, and 15 of the Securities Act of 1933. The complaint claims that the representations made in connection with the sale of WorldSpace Inc common stock in the IPO were materially false and misleading because WorldSpace Inc's share price was artificially inflated because subscribers who had purchased a three-month, pre-paid subscription to the WorldSpace Inc “access control system” pursuant to a promotional offer, but who declined to continue or to pay for a subscription following the end of the promotional period were not timely removed from WorldSpace Inc’s subscriber count. Rather than report these expired subscriptions as “churned,” defendants continued to include these expired subscriptions in WorldSpace Inc's subscriber count for an additional 90-days following the expiration of the initial three-month promotional period. At the time these facts and their effects on WorldSpace Inc’s operating results were fully disclosed, the price of WorldSpace Inc’s common stock declined.

The complaint further alleges that on March 16, 2006, on a conference call with investors, WorldSpace Inc revealed that service to subscribers was not immediately discontinued when a customer failed to renew its subscriptions. This news shocked the market, causing WorldSpace Inc share to plummet the next day, March 17, 2006, by $2.63 per share, a more than 22% drop from the previous day’s closing price of $11.52 per share.

In October of 2008 WorldSpace Inc filed for bankruptcy.