Class Action Lawsuit Against ProQuest

ProQuest is the company that is well known in genealogy circles as the provider of HeritageQuest Online, an online database of U.S. census records, Revolutionary War pension applications, family history and local history books, PERSI and more. As mentioned in this newsletter last week, the company stated that it intends to restate its financial statements for 1999 through 2004 and revise its results for the quarters of 2005, due to material irregularities in its accounting. (See http://blog.eogn.com/eastmans_online_genealogy/2006/02/proquest_to_res.html for the details.)

Now ProQuest's problems have deepened as a class action lawsuit has been launched against the company. Here is the announcement:

Schatz & Nobel, P.C. Announces Class Action Lawsuit Against ProQuest Company

HARTFORD, Conn., Feb. 13, 2006 - The law firm of Schatz & Nobel, P.C., which has significant experience representing investors in prosecuting claims of securities fraud, announces that a lawsuit seeking class action status has been filed in the United States District Court for the Eastern District of Michigan on behalf of all persons who purchased or acquired the common stock of ProQuest Company ("ProQuest" or the "Company") (NYSE:PQE) between January 9, 2003 and February 8, 2006 inclusive, (the "Class Period"). Also included are all those who acquired ProQuest through its acquisition of Voyager Expanded Learning.

The Complaint alleges defendants violated federal securities laws by issuing a series of materially false statements regarding ProQuest's financial condition. Specifically, defendants concealed the following facts: (i) the Company lacked requisite internal controls, and, as a result, the Company's projections and reported results were based upon defective assumptions and/or manipulated facts; and (ii) the Company's financial statements were materially misstated due to its failure to properly defer income and royalty payments and its improper capitalization of royalty expenses, thereby overstating its revenue and income from at least 1999 to 2005.

On February 9, 2006, prior to the market opening, ProQuest announced that it had discovered material irregularities in its accounting and would have to restate certain of its previously issued financial statements. As a result of the irregularities, the Company's deferred income and accrued royalty accounts were materially understated in previously issued financial statements and its prepaid royalty account was materially overstated. On this news, ProQuest's stock fell almost 18% from the previous day's close to close at $24.19 per share. During the Class Period, ProQuest traded as high as $37.89 per share on April 12, 2005.

If you are a member of the class, you may, no later than April 11, 2006, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a class member that acts on behalf of other class members in directing the litigation. Although your ability to share in any recovery is not affected by the decision whether or not to seek appointment as a lead plaintiff, lead plaintiffs make important decisions which could affect the overall recovery for class members, including decisions concerning settlement. The securities laws require the Court to consider the class member(s) with the largest financial interest as presumptively the most adequate lead plaintiff(s).

While Schatz & Nobel has not filed a lawsuit against the defendants, to view a copy of the Complaint initiating the class action or for more information about the case, class action cases in general, and your rights, please contact Schatz & Nobel toll-free at (800) 797-5499, or by e-mail at sn06106@aol.com, or visit our website: www.snlaw.net.

CONTACT:  Schatz & Nobel, P.C.
          Wayne T. Boulton
          Nancy A. Kulesa
          (800) 797-5499
          sn06106@aol.com
          www.snlaw.net

Comments

[David Staub]

Any time a company restates its earnings, you can pretty much count on some law firm sending out this type of press release. Note that it says "While Schatz & Nobel has not filed a lawsuit against the defendants ...." They are just looking for a plaintiff and you are providing this law firm with free publicity. This is not news (yet, anyway).