Stockholders v NDCHealth Corporation
NDCHealth Corporation Accused of Failing to Follow GAAP
Several class actions have been filed against health information purveyor NDCHealth Corporation (NYSE: NDC) and certain of its officers and directors by stockholders who purchased the company's common stock between October 1, 2003, and March 31, 2004. The actions claim 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.
Throughout the applicable period, the defendants issued quarter after quarter of strong financial results. The defendants allegedly failed to disclose that these stellar financial results were only made possible through improper revenue recognition practices in violation of Generally Accepted Accounting Principles (GAAP). On April 1, 2004, before the market opened, the defendants shocked the market by announcing that NDC would delay the release of its fiscal third-quarter financial results because of a review of some aspects of its revenue-recording procedures. The review related to the timing of sales recognition in its value-added reseller channel in NDC's physician business unit.
In response to the news concerning NDC's previously undisclosed accounting issues, the price of NDC stock dropped nearly 20% to close at $22.70 on unusually large trading volumes of nearly 4.8 million shares traded -- far greater than NDC's average daily trading volume of about 298,000 shares.
If you purchased securities issued by NDCHealth Corporation during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by June 7, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.
