SeraCareCohen Milstein serves as co-lead counsel for the lead plaintiffs in this securities class action, which is currently pending in the United States District Court for the Southern District of California. The Plaintiffs in this case seek to certify a class of persons who purchased SeraCare Life Sciences, Inc. (NASDAQ: SRLS) securities during the period from May 14, 2003 through March 23, 2006 (the "Class Period"). The complaint alleges that throughout the Class Period defendants directly participated in an accounting fraud which materially overstated the Company's financial results in violation of Generally Accepted Accounting Principles ("GAAP"). Specifically, the complaint charges that throughout the Class Period, defendants orchestrated and actively participated in the following improper accounting practices in direct violation of GAAP: (i) defendants used improper revenue recognition policies and practices; (ii) defendants failed to properly account for and value inventory; (iii) defendants failed to prevent certain Board members from exerting undue influence on the financial reporting process of the audit process; and (iv) defendants failed to maintain adequate internal controls and were, therefore, unable to ascertain the true financial condition of the Company. Defendants engaged in these improper accounting practices in order to bolster the Company's stock price, which enabled the Company to complete a secondary offering of stock in May 2005, raising $42 million for the Company, and allowed certain of the defendants to take advantage of the artificially inflated prices during the Class Period and sell 606,000 shares of their SeraCare stock for total proceeds of over $7.8 million. On December 20, 2005, before the market opened, the Company announced that "the chairman of the Company's audit committee has received a letter from Mayer Hoffman McCann P.C. (MHM), the Company's independent auditors, in which MHM raised concerns with respect to the Company's financial statements, accounting documentation and the ability of MHM to rely on representations of the Company's management." On this news, SeraCare shares fell as much as 62% before closing down $9.26 per share on volume of 5.8 million shares, 116 times the daily average volume for SeraCare. In September 2007, the Court approved a $3 million settlement with the individual defendants. The litigation is continuing against SeraCare’s auditors and the underwriters of the secondary offering of stock. On March 14, 2008, the Court upheld the claims brought against the auditors and underwriters pursuant to Section 11 of the Securities Act and dismissed the Section 10(b) claims against the auditors. Both the auditors and the underwriters have asked the Court to reconsider that order.
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