The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against FindWhat.com, Inc. (“FindWhat” or “the Company,” and now known as “Mivas, Inc.”) and certain of its senior executives. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired FindWhat common stock during the Class Period.
Findwhat is an Internet commerce company which provides “pay-per-click” or keyword-targeted advertising services. During the Class Period, Defendants issued public statements reporting seemingly unstoppable growth stemming from its primary pay-per-click business. Defendants attributed the Company’s success to a “proven and profitable business model,” and emphasized the Company’s ability to meet Wall Street revenue goals. In fact, prior to February 23, 2005, the Company met or exceeded analyst growth expectations in every single quarter during the Class Period.
Specifically, the Complaint alleged that behind the scenes., however, things were dramatically different, and FindWhat was a company in trouble, experiencing a severe decline in revenues from its core business due to competition from major industry players like Google and Yahoo. Additionally, two of the Company’s main revenue generating distribution partners were using illegal means to inflate revenues. The use of such illicit methods of creating internet traffic, commonly referred to as “click-fraud,” meant that advertisers were not forwarded legitimate leads of consumers interested in acquiring their products. This resulted in advertisers refusing to place high bids with FindWhat, causing FindWhat’s revenue shortfall to worsen. Defendants knew that declining revenues needed to be boosted, and therefore allowed the fraud to continue. Fearing imminent discovery of the Company’s accounting and distribution quality issues, Findwhat insiders sold nearly $7 million worth of Company stock in the fall and winter of 2004 at artificially inflated prices. Struggling with declining bid prices and the resulting declining revenue in its core business, as well as costly internal control issues and accounting deficiencies generated by integrating four companies during the first seven months of 2004 alone, Defendants knew they could only provide the results Wall Street had come to expect through improper means in boosting its revenues. After the Company partially revealed its accounting fraud and its reliance on distribution partners, FindWhat’s stock price fell to $4.83 per share, a drop of nearly 90% from its Class Period high.
On January 17, 2006, Plaintiffs filed an Amended Consolidated Complaint. Defendants moved to dismiss the Complaint on February 9, 2006. On March 15, 2007, the Court denied in part Defendants’ Motion.
After Lead Plaintiffs successfully defended Defendant’s Motion to Dismiss and gained class certification, the Court granted Defendant’s Motion for Summary Judgment. Lead Plaintiffs then successfully appealed the District Court’s decision to the Eleventh Circuit Court of Appeals. On October 1, 2012, the United States Supreme Court denied Defendant’s petition for certiorari.
On March 25, 2014, the parties participated in mediation. After continued settlement negotiations, the parties reached an agreement to settle the Litigation for $2,400,000 on behalf of the Class. On May 22, 2014, the Court issued an order preliminarily approving the settlement, and then on September 15, 2014, entered a final judgment finding the settlement to be fair, adequate and reasonable in all respects.