Xybernaut Corp.On May 9, 2005, Cohen Milstein (or the “Firm”) filed a lawsuit in the United States District Court for the Eastern District of Virginia against Xybernaut Corp. (or the “Company”) and several of its officers and directors (collectively “Defendants”) which alleged that Defendants made materially false and misleading statements between May 10, 2002 and April 8, 2005, inclusive (the “Class Period) in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). On January 19, 2007, the Firm was appointed as co-lead counsel for the class. Specifically, the lawsuit alleged that the Company’s wholly insufficient internal controls allowed its then-Chief Executive Officer, amongst others, to improperly use a substantial amount of Xybernaut funds for personal expenses. In addition, it was alleged that senior management entered into major transactions in violation of Company’s internal control policies and concealed material financial conditions from the Company’s Board of Directors (the “Board”). Likewise, it was alleged that certain members of the Company’s senior management failed to disclose to the Audit Committee and Board written correspondences by its then-Chief Financial Officer outlining serious concerns over the breakdown of the Company’s internal controls. Finally, the lawsuit alleged that certain Defendants affirmatively impeded the Audit Committee’s investigation into the alleged fraud. In April, 2005, the Company’s Chief Executive Officer and Chief Operating Officer were removed as officers and directors of the Company and, on July 25, 2005, Xybernaut filed a Chapter 11 bankruptcy petition with the United States Bankruptcy Court for the Eastern District of Virginia. Throughout the bankruptcy proceedings, Cohen Milstein was extremely active in protecting the rights of Xybernaut shareholders. Then, after defeating several motions to dismiss the class action complaint, Cohen Milstein was able to reach a settlement with the Defendants. In total, the class received an all cash settlement of $6,300,000, which received final approval from the Court on or about February 20, 2008. The Firm believes this was an outstanding result, especially considering that the Company was bankrupt and was no longer a publicly-traded company. If you have any questions about the litigation and/or settlement, please contact the attorneys using the links to the right. |
