A class action has been filed against cancer information company IMPATH, Inc. (Nasdaq: IMPH) and certain of its officers and directors by stockholders who purchased the company's common stock between April 25, 2001, and July 29, 2003. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

The action alleges that IMPATH's quarterly press releases and SEC filings were materially false and misleading because they failed to disclose that the company had materially overstated its accounts receivables and improperly capitalized a material asset, thereby artificially inflating the company's reported results and financial condition. On July 30, 2003, before the open of regular trading, IMPATH issued a press release announcing that its audit committee had begun an investigation into possible "accounting irregularities" by the company and that the company believed it had overstated its accounts receivable and had been improperly capitalizing its GeneBank asset.

As a result of these developments, IMPATH warned that a restatement of previously filed financial reports was "likely," and that the company had advised its creditors that its financial reports "may have been inaccurate as a result of these issues." In response to this announcement, the Nasdaq Stock Market halted trading in the company's common stock and announced that the stock will not resume trading until IMPATH provides Nasdaq with additional information.