NEW YORK, Aug. 18, 2006 (PRIMEZONE) -- Wechsler Harwood LLP announces that on August 18, 2006 it filed a class action lawsuit in the United States District Court for the Southern District of New York (Civil Action No. 06-cv-6313) 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 February 17, 2006 through August 9, 2006 (the "Class Period").
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 the 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 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 price of the stock. The Complaint alleges that to affect a sale or merger of IMAX, and to gain as high a 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 accepted 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 who 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.
Wechsler Harwood LLP has extensive experience in prosecuting investor class actions involving financial fraud. Wechsler Harwood LLP has prosecuted securities, antitrust and consumer class actions for over 10 years. For more information about Wechsler Harwood LLP, please visit its website at www.whesq.com.
If you are a member of the Class described above, you may, no later than October 10, 2006, 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. If you wish to discuss this action or have any questions concerning this case or your rights or interests, please contact:
Virgillio Soler at Wechsler Harwood LLP, 488 Madison Avenue, New York, New York 10022 at (toll free) 877-935-7400 or by e-mail at vsoler@whesq.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca