According to the lawsuit, Bankrate issued materially false and misleading financial statements because (1) Bankrate's financial statements contained errors related to the improper recognition of revenues and expenses; (2) the Company lacked adequate internal controls over financial reporting; and (3) as a result, the Company's financial statements were materially false and misleading at all relevant times. According to the Complaint, on September 15, 2014, Bankrate disclosed that the SEC has requested documents related to its financial reporting during 2012, and that Chief Financial Officer, Edward DiMaria has resigned. The Company also announced that in connection with the SEC's investigations, investors should no longer rely on its 2011, 2012, and 2013 financial statements. That day, the Company's stock price fell as much as 22%, damaging investors. Less than a month later, on October 9, 2014, Bankrate filed a current report on Form 8-K with the SEC disclosing that the prior day, the Company had terminated DiMaria from his remaining role with the Company for cause because DiMaria had refused to cooperate in the ongoing SEC and internal investigations of Bankrate’s financial results for FY11, FY12, and FY13. Bankrate further disclosed that the United States Department of Justice also had opened an investigation into the same financial reporting issues that the SEC was investigating. As a result, the price of Bankrate common stock declined an additional 11.20%.
On December 8, 2015, Lead Plaintiff filed a Second Amended Complaint. Following Defendants’ motion to dismiss briefing, the parties began negotiations towards a possible settlement of the action. As a result of these efforts, the parties agreed to a settlement of $20,000,000. On July 18, 2016, the Parties filed a Stipulation and Agreement of Settlement. The Court granted Lead Plaintiff’s Unopposed Motion for Preliminary Approval of Proposed Class Action Settlement on August 26, 2016. After a February 6, 2017 Settlement Hearing to consider, among other things, whether the terms and conditions of the Settlement are fair, reasonable, and adequate, the Court gave final approval of the settlement.