Dynacq (NASDAQ:DYIIE)
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Shareholder Class Action Filed Against Dynacq Healthcare, Inc. by the Law Firm
of Schiffrin & Barroway, LLP
BALA CYNWYD, Pa., Jan. 2 /PRNewswire/ -- The following statement was issued
today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United
States District Court for the Southern District of Texas, Houston Division, on
behalf of all purchasers of the common stock of Dynacq Healthcare, Inc.
(NASDAQ:DYIIE) ("Dynacq" or the "Company") from January 14, 2003 through
December 18, 2003, inclusive (the "Class Period").
If you wish to discuss this action or have any questions concerning this notice
or your rights or interests with respect to these matters, please contact
Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll
free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at .
The complaint charges that defendants Dynacq, Philip S. Chan, and Chiu M. Chan
violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and
Rule 10b-5 promulgated thereunder, by issuing a series of material
misrepresentations to the market between January 14, 2003 and December 18, 2003.
More specifically, the complaint alleges that the defendants' statements were
materially false and misleading because they failed to disclose and/or
misrepresented the following adverse facts: (1) that the Company had materially
overstated its earnings, revenues, net income, and earnings per share; (2) that
the Company was improperly accounting for its costs and revenue in violation of
Generally Accepted Accounting Principals ("GAAP"); (3) that the Company lacked
adequate internal controls and was therefore unable to ascertain the true
financial condition of the Company; and (4) that as a result, the value of the
Company's net income and financial results were materially overstated at all
relevant times.
On December 1, 2003, the Company announced that it was requesting an automatic
extension of up to 15 days for filing its 2003 Form 10-K. The Company stated
that recently the Division of Corporation Finance of the United States
Securities and Exchange Commission ("SEC") commented upon Dynacq's periodic
filings. On December 16, 2003, the Company announced that it would further
postpone the filing of its 2003 Form 10-K until the SEC completed its review of
Dynacq's periodic filings and its independent auditors have completed their
audit of the Company's Aug. 31, 2003 financial statements.
On December 18, 2003, the Company announced that Ernst & Young, LLP ("E&Y")
resigned late on December 17, 2003 as the Company's independent auditor
effective immediately. E&Y verbally advised the Company that E&Y resigned due
to the Company's lack of internal controls necessary to develop reliable
financial statements. News of this shocked the market with shares of Dynacq
falling 18.56 percent or $2.04 per share to close at $8.95 per share on December
18, 2003.
The Company further shocked the market when it announced, after the markets had
closed on December 18, 2003, that had received a NASDAQ Staff Determination
stating that because Dynacq failed to comply with the requirement of NASD
Marketplace Rule 4310 (c) (14), that it file a copy of its Form 10-K Annual
Report to the Securities and Exchange Commission ("SEC") in a timely fashion,
that its common stock would be delisted from the NASDAQ on December 30, 2003,
unless Dynacq requested a hearing. Additionally, the Company disclosed that it
had received a notice from the Ft. Worth, Texas office of the SEC that it was
conducting an informal investigation pertaining to Dynacq's reporting of its
financial statements, its recognition of costs and revenue, its allowances for
doubtful accounts, and its internal controls.
News of this shocked the market. Shares of Dynacq plummeted 54% or $4.86 per
share to close at $4.09 per share on December 19, 2003.
Plaintiff seeks to recover damages on behalf of class members and is represented
by the law firm of Schiffrin & Barroway, which prosecutes class actions in both
state and federal courts throughout the country. Schiffrin & Barroway is a
driving force behind corporate governance reform, and has recovered in excess of
a billion dollars on behalf of institutional and high net worth individual
investors. For more information about Schiffrin & Barroway, or to sign up to
participate in this action online, please visit http://www.sbclasslaw.com/.
If you are a member of the class described above, you may, not later than
February 24, 2004, move the Court to serve as lead plaintiff of the class, if
you so choose. In order to serve as lead plaintiff, however, you must meet
certain legal requirements. You may retain Schiffrin & Barroway, or other
counsel of your choice, to serve as your counsel in this action.
CONTACT: Schiffrin & Barroway, LLP
Marc A. Topaz, Esq.
Stuart L. Berman, Esq.
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004
1-888-299-7706 (toll free) or 1-610-667-7706
Or by e-mail at
DATASOURCE: Schiffrin & Barroway, LLP
CONTACT: Marc A. Topaz, Esq., or Stuart L. Berman, Esq. of Schiffrin &
Barroway, LLP, 888-299-7706, or +1-610-667-7706, or
Web site: http://www.sbclasslaw.com/