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March 10, 2005
Viisage Class Action
The Complaint alleges that Viisage violated federal securities laws by issuing false or misleading information. Specifically, Viisage borrowed funds from its controlling shareholder, and was in dire need of a credit line adequate to finance its ongoing business needs. In order to secure such credit, the defendants engaged in a scheme to artificially engineer a profit in the third quarter of 2004, and made earnings projections known by them to be baseless. The third quarter profit, which was reported on October 25, 2004, was only made possible through various accounting manipulations, whereby certain assets were prematurely recognized, while certain expenses were artificially deferred from the third quarter of 2004 into the fourth quarter of 2004.
On February 27, 2005, defendants disclosed numerous fourth quarter charges and a significant asset impairment, all of which returned Viisage to substantial unprofitability. On this news, Viisage stock fell over 20%. Then, on March 2, 2005, defendants announced that Viisage had a "material weakness" in its internal financial controls, and that BDO Seidman LLP, the Company’s external accounting firm, would issue an adverse opinion with respect to the effectiveness of the Company’s internal controls over financial reporting. As a result, the stock plummeted an additional 20%, to close at $4.50 on March 3, 2005.
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Posted on March 10, 2005 12:01 PM by Class 65.
Filed in Personal Injury Resources under class action law.
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