NEW YORK, Aug. 14 LAWFUEL – Law News Network -Abbey Spanier Rodd Abrams & Paradis, LLP announces that on August 11, 2006 it filed a class action lawsuit in the United States District Court for the Southern District of New York (Civil Action No. 06-6128) on behalf of purchasers of the common stock and other securities of IMAX CORPORATION (“IMAX” or the “Company”) (Nasdaq: IMAX) who purchased during the period from February 17, 2006 through August
9, 2006 (the “Class Period”). Please call or email Nancy Kaboolian at
1-800-889-3701 or [email protected] for more information.
The Complaint alleges that defendants 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 during the Class Period thereby artificially inflating the price of IMAX securities. During February and March 2006, the company issued press releases touting the Company’s financial success, and indicated the
Company’s willingness to explore financial options. A press release issued as late as May 9, 2006 continued to mislead investors concerning IMAX’s
true financial condition.
Then on August 9, 2006, IMAX shocked the market by announcing that it
was being investigated by Securities and Exchange Commission (“SEC”)
regarding revenue-recognition timing. The SEC’s inquiry was focused on
IMAX’s recognition of revenue in the fourth quarter of 2005 in 10 theaters that were not open during that quarter. Further, IMAX said that it had identified a “material weakness” related to revenue-recognition issues in its second- quarter financial report, leading to a reduction in revenue.
The press release also stated the Company had yet to find an investor to
effectuate a merger or purchase. After these announcements the price of
IMAX shares crashed, falling by 40.6%, or $3.91 on the following trading
day.
The Complaint alleges that IMAX and its top executives knew during the Class Period that revenue was being improperly recognized, but failed to make the necessary adjustments, thus artificially inflating the stock. The Complaint alleges that to affect a sale or merger of IMAX, and to gain as higher price as possible for IMAX in such a transaction, it was critical
that the value of IMAX was perceived to be high. Therefore, IMAX and some
of its top executives sought to bolster the share price of the Company by
strategically recognizing revenue when it most suited the Company, even
when such revenue recognition policies violated recognized accounting
principles.
Plaintiff seeks to recover damages on behalf of all those who purchased
or otherwise acquired IMAX securities during the Class Period. If you
purchased or otherwise acquired IMAX securities during the Class Period,
and either lost money on the transaction or still hold the securities, you
may wish to join in the action to serve as lead plaintiff. If you purchased
IMAX securities during the Class Period, you may, no later than October 10, 2006 request that the Court appoint you as lead plaintiff.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead
plaintiff, the Court must determine that the class member’s claim is
typical of the claims of other class members, and that the class member
will adequately represent the class. Under certain circumstances, one or
more class members may together serve as “lead plaintiffs.” Your ability to
share in any recovery is not, however, affected by the decision whether or
not to serve as a lead plaintiff.
Abbey Spanier Rodd Abrams & Paradis, LLP has been retained to represent
the Class. The attorneys at Abbey Spanier Rodd Abrams & Paradis, LLP have
extensive experience in securities class action cases, and have played lead
roles in major cases resulting in the recovery of over one billion dollars
for investors. If you would like to discuss this action or if you have any questions concerning this Notice or your rights as a potential class member or lead plaintiff, you may contact:
