ECtel Limited

In 2004, a class action complaint was filed on behalf of a proposed class of purchasers of the securities of ECtel Limited between April 24, 2001 and April 2, 2003, inclusive (the “Class Period”) in the United States District Court for the District of Maryland. On September 12, 2005, Cohen, Milstein, Hausfeld, P.L.L.C. was appointed as Liaison Counsel for the proposed Class and an Amended Complaint was subsequently filed.

The complaint alleges that ECtel Ltd. (“ECtel” or the “Company”), ECI Telecom, Ltd. (parent company of ECtel), Aharon Shech (former President and CEO of ECTel), Avi Goldstein (former CFO of ECtel), and David Rovner (a/k/a David Rubner) (former Chairman of the Board at ECtel) violated the Securities Exchange Act of 1934. According to the complaint, ECtel, through its officers and employees, improperly recognized tens of millions of dollars in revenues in violation of both its stated revenue recognition policies and generally accepted accounting principles. The heart of the fraud was the recording of revenues despite non-binding agreements with customers and the addition of material sale contingencies to what appeared to be binding contracts.

The Defendants moved to dismiss the Amended Complaint and, on July 18, 2006, the court granted Defendants’ request. On April 6, 2007, Plaintiffs timely filed an appeal with the United States Court of Appeals for the Fourth Circuit. The appeal is currently pending.