Carreker Corporation Securities Litigation
Berger Montague filed a class action suit against Carreker Corporation (“Carreker” or the “Company”) and certain of its officers, on behalf of all persons or entities who purchased Carreker common stock from July 30, 1999 to December 10, 2002 (the “Class Period”).
The complaint alleged that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission by issuing a series of materially false and misleading statements to the market between May 20, 1998 and December 10, 2002. According to the complaint, Carreker filed financial statements during the Class Period which represented that revenues, income, and earnings were growing consistently and robustly, and that the Company had achieved several consecutive quarters of record growth, attributing its purported success to the Company’s business model and strong demand for its products. According to the complaint, these statements were materially false and misleading in that Carreker failed to disclose that it had artificially inflated its reported revenues, income, and earnings throughout the class period by engaging in improper revenue recognition practices.
On December 10, 2002, Carreker disclosed that it was investigating whether the Company improperly recognized revenues by accounting for revenues up-front, or in a single quarter, instead of over several quarters ratably, as required by applicable generally accepted accounting principles (GAAP). The improper revenue recognition required a restatement of Carreker’s financial statements filed during the Class Period beginning with the 1998 fiscal year report.
In response to the disclosure of Carreker’s true financial condition, the market value of its common stock plummeted from $5.08 per share on December 9, 2002 to $3.93 on December 10, 2002. The decline represents a one-day loss of almost 23%.
The case was settled for $5.25 million in 2006. The deadline for Class Members to submit claim forms was October 2, 2006.