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Concealment of Material Business Trends

Securities and Exchange Commission (“SEC”) Regulation S-K, Item 303, requires companies to provide specific information in their annual and quarterly financial reports regarding liquidity, capital resources, operations, off-balance sheet arrangements, and contractual obligations. Companies are required to identify important known trends or events under those categories. Item 303 also requires the more general disclosure of all information that a company believes is “necessary to an understanding of its financial condition, changes in financial condition and results of operations.” The disclosure requirements of Item 303 are broad, and encourage companies to adopt a policy of full disclosure towards their shareholders.

If a company fails to provide Item 303 required information, that may give rise to a claim for securities fraud. Under the securities laws, companies cannot publish materially false or misleading statements. If, for example, a company is discussing its operations positively, but does not disclose a recent slowdown in sales, that may render the positive statements about operations misleading. Another instance that may run afoul of Item 303 is when a company fails to disclose the loss of a major contract. Companies are free to negotiate contracts, but if an important contract has been lost, that information must be disclosed under Item 303. Failure to disclose such a development might render a company’s optimistic statements or forecasts about its future performance false, or at the very least misleading.

A successful securities fraud claim based on concealment of a material business trend or event requires an experienced securities fraud attorney with an understanding of the securities laws, Item 303, and the interaction between the two. The securities fraud attorneys at GPM have the skill to prosecute such claims.

If you believe that a company concealed important information regarding its business trends or events, please contact the securities fraud attorneys at GPM.

Court Recognition

“And without question, the Court is of the opinion that the value of benefit that’s been conferred to the class is extremely sizable and that this Court is certainly aware that the skill and efficiency of plaintiff’s counsel is what attributed to this settlement, and they are learned securities counsel. The Court is mindful of that, and as a result they were able to sort of weed their way through the complex issues in this case, and also to bring this about — bring about a settlement rather in short order as these matters go. So the Court certainly attributes that to counsel’s skill and efficiency, as well as the ability to work with the adversaries in this matter.”

–Hon. Susan D. Wigention, U.S. District Judge, District of New Jersey

“Class Counsel has conducted the litigation and achieved the Settlement in good faith and with skill, perseverance and diligent advocacy”

— Hon. Donovan W. Frank, U.S. District Judge, District of Minnesota

“The court finds that the Settlement Fund… created by Class Counsel is an exceptional result… The settlement is significantly above the average securities class action settlement when measured as a percentage of losses recovered… The court finds that Class Counsel, particularly Co-Lead Counsel, exerted tremendous effort on behalf of the class in the prosecution of this action… The Court finds that Class Counsel skillfully prosecuted this action, particularly given that this case was unusually complex relative to most securities fraud class actions. ”

–Hon. Dickran M. Tevrizian (Ret.), U.S. District Court Judge, Central District of California

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