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THQ Class Action Suit Case Filing | Play Station 3 | Class Action
THQ Class Action Suit Case Filing
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Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 1 of 36 Page ID #:5
1 ROBINS OBLLER RUJDMAN 2 DARkEN J. ROBBNS (168593) 3 4 5 6 7 8
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11 Attorneys for Plaintiff 12 [Additional counsel app oar on signature page.] 13 14 15 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION VIA FA12 No. CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS - 5227 GAl? (JEM)
16 KHALIL ZAGHIAN, Individually and on Behalf of All Others Similarly 17 Situated, 18 19
20 THO INC. BRIAN J. FARR:ELL and PAUL J. PUCINO, 21 Defendants. 22 23 24 25 26 27 28
DEMAND FOR JURY TRIAL.
2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 2 of 36 Page ID #:6
Plaintiff alleges the following based upon the investigation of plaintiff's
2 counsel, which included a review of United States Securities and Exchange 3 Commission ("SEC") filings by THQ Inc. ("THQ" or the "Company"), as well as 4 regulatory filings and reports, securities analysts' reports and advisories about the
5 Company, press releases and other public statements issued by the Company, and
6 media reports about the Company, and plaintiff believes that substantial additional 7 evidentiary support will exist for the allegations set forth herein after a reasonable 8 opportunity for discovery. 9 10 1. JURISDICTION AND VENUE The claims asserted herein arise under and pursuant to § § 10(b) and 20(a)
11 of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § §78j(b) and 12 78t(a)J and Rule lob-S promulgated thereunder by the SEC [17 C.F.R. §240.10b-5]. 13 2. This Court has jurisdiction over the subject matter of this action pursuant
14 to 28 U.S.C. §1331 and §27 of the Exchange Act. 15 3. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b), because
16 defendants maintain an office in this District and many of the acts and practices 17 complained of herein occurred in substantial part in this District. 18 4. In connection with the acts alleged in this complaint, defendants, directly
19 or indirectly, used the means and instrumentalities of interstate commerce, including, 20 but not limited to, the mails, interstate telephone communications and the facilities of 21 the national securities markets. 22 23 NATURE OF THE ACTION
This is a federal securities class action on behalf of purchasers of the
24 common stock of THQ between May 3, 2011 and February 3, 2012, inclusive (the 25 "Class Period"), seeking to pursue remedies under the Exchange Act. 26 27 28 -1-
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PARTIES 6. Plaintiff Khalil Zaghian, as set forth in the accompanying certification
3 and incorporated by reference herein, purchased the common stock of THQ during the 4 Class Period and has been damaged thereby.
Defendant THQ develops, publishes, and distributes interactive
6 I entertainment software for various game systems, personal computers ("PC"), 7 wireless devices, and the Internet. 8 8. Defendant Brian J. Farrell ("Farrell") was, at all relevant times, Executive
9 Chairman, Chief Executive Officer and President of THQ. 10 9. Defendant Paul J. Pucino ("Pucino") was, at all relevant times, Chief
11 Financial Officer and Executive Vice President of THQ.
10. The defendants referenced above in ¶8-9 are referred to herein as the
13 I "Individual Defendants." 14 11. During the Class Period, the Individual Defendants, as senior executive
15 officers and/or directors of THQ, were privy to confidential and proprietary 16 information concerning THQ, its operations, finances, financial condition and present 17 and future business prospects. The Individual Defendants also had access to material 18 adverse non-public information concerning THQ, as discussed in detail below. 19 Because of their positions with THQ, the Individual Defendants had access to nonpublic information about its business, finances, products, markets and present and 21 future business prospects via internal corporate documents, conversations and 22 connections with other corporate officers and employees, attendance at management 23 and/or board of directors meetings and committees thereof and via reports and other 24 information provided to them in connection therewith. Because of their possession of
25 such information, the Individual Defendants knew or recklessly disregarded that the
26 adverse facts specified herein had not been disclosed to, and were being concealed 27 from, the investing public. 28 -2-
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12. The Individual Defendants are liable as direct participants in the wrongs
2 complained of herein. In addition, the Individual Defendants, by reason of their status
3 as senior executive officers and/or directors, were "controlling persons" within the 4 meaning of §20(a) of the Exchange Act and had the power and influence to cause the 5 Company to engage in the unlawful conduct complained of herein. Because of their 6 positions of control, the Individual Defendants were able to and did, directly or 7 indirectly, control the conduct of THQ's business. 8 13. The Individual Defendants, because of their positions with the Company, 9 I controlled and/or possessed the authority to control the contents of its reports, press 10 releases and presentations to securities analysts and through them, to the investing 11 public. The Individual Defendants were provided with copies of the Company's
12 reports and press releases alleged herein to be misleading, prior to or shortly after their
13 issuance and had the ability and opportunity to prevent their issuance or cause them to 14 be corrected. Thus, the Individual Defendants had the opportunity to commit the '51 fraudulent acts alleged herein. 16 14. As senior executive officers and/or directors and as controlling persons of '71 a publicly traded company whose common stock was, and is, registered with the SEC 18 pursuant to the Exchange Act, and was, and is, traded on the NASDAQ Stock Market 19 ("NASDAQ") and governed by the federal securities laws, the Individual Defendants 20 had a duty to promptly disseminate accurate and truthful information with respect to 21 THQ's financial condition and performance, growth, operations, financial statements, 22 business, products, markets, management, earnings and present and future business 23 prospects, and to correct any previously issued statements that had become materially 24 misleading or untrue, so that the market price of THQ common stock would be based 25 upon truthful and accurate information. 27 requirements and obligations. 28 -3The Individual Defendants'
26 misrepresentations and omissions during the Class Period violated these specific
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15. The Individual Defendants are liable as participants in a fraudulent
2 scheme and course of conduct that operated as a fraud or deceit on purchasers of THQ 3 common stock by disseminating materially false and misleading statements and/or 4 I concealing material adverse facts. The scheme: (i) deceived the investing public
5 I regarding THQ's business, operations and management and the intrinsic value of THQ
common stock; (ii) enabled the Company to enter into a credit facility whereby the 7 I Company could borrow up to $75 million in capital; and (iii) caused plaintiff and
8 I members of the Class to purchase THQ common stock at artificially inflated prices. 9 10
CLASS ACTION ALLEGATIONS 16. Plaintiff brings this action as a class action pursuant to Federal Rule of
11 Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons or
12 entities who purchased the common stock of THQ during the Class Period (the 13 "Class"). Excluded from the Class are defendants and their families, the officers and 14 directors of the Company, at all relevant times, members of their immediate families 15 and their legal representatives, heirs, successors or assigns and any entity in which 16 defendants have or had a controlling interest. 17 17. The members of the Class are so numerous and geographically dispersed
18 I that joinder of all members is impracticable. THQ stock was actively traded on the 19 NASDAQ. While the exact number of Class members is unknown to plaintiff at this
20 time and can only be ascertained through appropriate discovery, plaintiff believes that 21 there are hundreds of members in the proposed Class. Record owners and other 22 members of the Class may be identified from records maintained by THQ or its 23 transfer agent and may be notified of the pendency of this action by mail, using the 24 form of notice similar to that customarily used in securities class actions.
Plaintiff's claims are typical of the claims of the members of the Class as
261 all members of the Class are similarly affected by defendants' wrongful conduct in 27 violation of federal law that is complained of herein.
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19. Plaintiff will fairly and adequately protect the interests of the members of
2 the Class and has retained counsel competent and experienced in class and securities 3 litigation. 4 20. Common questions of law and fact exist as to all members of the Class
5 and predominate over any questions solely affecting individual members of the Class.
6 Among the questions of law and fact common to the Class are: 7 (a) whether the federal securities laws were violated by defendants'
8 acts as alleged herein; 9 (b) whether statements made by defendants to the investing public
10 misrepresented material facts about the business, operations and management of THQ; 11 (c) whether the price of THQ common stock was artificially inflated
12 during the Class Period; and 13 (d) to what extent the members of the Class have sustained damages
14 and the proper measure of damages. 15 21. A class action is superior to all other available methods for the fair and
16 efficient adjudication of this controversy since joinder of all members is 17 impracticable. Furthermore, as the damages suffered by individual Class members 18 may be relatively small, the expense and burden of individual litigation make it 19 impossible for members of the Class to individually redress the wrongs done to them. 20 There will be no difficulty in the management of this action as a class action. 21 22 SUBSTANTIVE ALLEGATIONS 22. Defendant THQ describes itself as a "leading worldwide developer and
23 publisher of interactive entertainment software. The company develops its products 24 for all popular game systems, personal computers and wireless devices."
23. THQ develops games for the three major game consoles: Microsoft's
26 Xbox 360, Sony's Playstation 3 ("Playstation 3" or "PS3"), and Nintendo's Wii. Each 27 system generally carries a specific demographic fan base. For example, Xbox 360 and 28
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Playstation 3 attract generally more mature audiences, while the Wii is used by
2 younger children, families, and casual garners. 3 24. On August 17, 2010, the Company issued a press release announcing that
4 it was launching its uDrawTM GameTabletTM for the Nintendo WiiTM gaming system
5 during the 2010 holiday season. According to the Company, the device is a "small 6 white handheld tablet with a 4" x 6" drawing space and detachable, pressure-sensitive
7 stylus designed to offer more subtle control and precision than available on the 8 traditional Wii RemoteTM." 9
On November 15, 2010, defendants issued a press release announcing
10 that the uDraw GameTabletTM was available at retailers for the 2010 holiday season. 11 The tablet would be sold at a suggested retail price of $69.99 and would be bundled 12 with the uDraw StudioTM video game. Moreover, the Company announced that two 13 additional video games would be available to the public - PictionaryTM and Dood's 14 Big AdventureTM - at a suggested retail price of $29.99 each. 15 26. The Class Period begins on May 3, 2011. On that date, THQ issued a
16 press release announcing its financial results for the fiscal fourth quarter and year-end 17 2011, the period ended March 31, 2011. For the quarter, the Company reported 18 GAAP net sales of $124.2 million and a GAAP net loss of $44.1 million, or a $0.65 19 GAAP diluted loss per share. Moreover, based on the purported success of the uDraw 20 GameTabletTM for the Nintendo WiiTM, defendants announced that THQ planned to 21 develop its uDraw GameTabletTM for the Microsoft Xbox 360 and Sony Playstation 3 22 during the 2011 holiday season. Defendant Farrell, commenting on the results, stated, 23 in pertinent part, as follows: 24 25 26 27 28 "THQ posted strong fourth quarter results primarily driven by the success of Homefront .... We have already shipped 2.6 million units, a solid start for this new franchise, which kicks off the strongest pipeline of AAA core games in our history.
We also continued to grow the
uDraw franchise with the successful international debut
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 8 of 36 Page ID #:12
compelling new tablet. Today, I am pleased to announce that we plan to bring exclusively designed uDraw Game Tablets to Microsoft Xbox 360 and Sony PS3 platforms this holiday." We expect to generate significant growth, profitability and cash in fiscal 2012, driven by the latest installments of multi-million unit
selling franchises, Saints Row, Red Faction, Warhammer 40,000, MX vs. ATV, UFC, WWE, and uDraw. We are creating a digital ecosystem for each of these games that will continue to keep consumers engaged and generate additional revenue opportunities beyond the initial retail sale. We also continue to aggressively invest in our digital initiatives, including online social and mobile offerings as well as our Warhammer
40,000: Dark Millennium Online MMO."
13 With regard to the uDraw GameTablet, the press release stated, in pertinent part, as 14 follows: 15 16 17 18 19 20 21
THQ brought to market the uDraw GameTablet, a first-of-its-kind, innovative new gaming accessory, which hit retail store shelves worldwide in fiscal 2011, gaining instant popularity for its creativity and
unique functionality. Today the company announced plans to bring exclusively designed uDraw Game Tablets to Microsoft Xbox 360 and Sony PS3 platforms this holiday. 27.
Following the issuance of the press release, THQ held a conference call
22 with analysts and investors to discuss the earnings announcement and the Company's 23 operations. With regard to the Company's outlook, defendant Farrell, stated, in 24 pertinent part, as follows: 25 26 27 28
As we conclude fiscal 2011, we have positioned THQ for future growth and profitability, based on the strategy we outlined over two years ago. In fiscal '10, we drove a dramatic turnaround. Fiscal '11 was our investment year as we developed a pipeline of quality products for this
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 9 of 36 Page ID #:13
year and beyond and as Paul will discuss in a few minutes, our guidance for fiscal '12 demonstrates that we believe the continued execution on our strategy will return THQ to significant growth, profitability and cash generation.
Consistent with the strategy that we've outlined for you over the last two years, we were expecting significant growth in THQ's fiscal '12 and '13. Our growth will be driven by three focus areas, one, a steady flow of core game franchises; two, expansion of our casual and lifestyle products like our uDraw Game Tablet; and three, increasing digital revenues. In fiscal '12 we plan to launch the strongest core game lineup in THQ's history. Our lineup includes the latest installment of multimillion unit selling franchises. MX versus ATV Alive slated for May 10th, Red Faction Armageddon scheduled for June 7, UFC Personal Trainer set to launch June 14, Warhammer 40,000 Space Marine slated for August, Saint's Row III at holiday, an all new WWE game also for holiday and UFC 3 scheduled to return in the fourth quarter of fiscal '12. * * * In conclusion, with a strong pipeline of games, we are well positioned for fiscal '12 and beyond. I'm most pleased with our growing portfolio of owned AAA franchises which generate high margins and provide a platform for extensive digital revenue opportunities. We plan to sequel and extend these franchises to fuel consistent growth over the long term. This pipeline should drive significant sales and improve margins which will increase profitability and cash generation. And, as we have said in the past, we will continue to look for efficiencies in our operating structure. I want to thank and acknowledge everyone at THQ
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for their continued efforts in bringing THQ' s best product pipeline in our history to market.
3 I With regard to the Company's outlook, defendant Pucino stated, in pertinent part, as 4 I follows:
Now, I'd like to share with you our guidance and perspective on our business starting with the fiscal '12 full year. We expect to report fiscal '12 net sales in the range of $925 million to $1 billion which represents a 15% to 25% increase from fiscal '11. We expect to report net income per share in the range of $0.25 to $0.40 versus a loss of $0.24 for fiscal '11. The three key drivers of fiscal '12 financial results are, one, the strongest lineup of AAA titles in the history of the Company; two, uDraw for Wii, X-Box 36 and PS3; and three, increasing digital revenues. Now, let's take a moment to review the flow of results throughout the year. Fiscal '12 will be characterized by significant investments in the first half of the year including the timing of capitalization based on where development projects are in their life cycle and heavy investments in product development for digital releases which are not currently capitalized under accounting rules. It also reflects investment in marketing for current period releases and for titles launching in the second half of the year and early fiscal '13. Also, our software amortization will be significantly higher as a percent of net sales in the first half of the year reflecting amortization for titles released late in the fourth quarter of fiscal '11, as well as heavy amortization associated with release of eight key titles in the first half of this year versus two key titles for the prior year first half. Moving on to the first quarter of fiscal '12, we expect to report net sales in the range of $165 million to $180 million compared with $160
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 11 of 36 Page ID #:15
million a year ago. Key titles driving our first quarter results this year include Red Faction Armageddon, MX versus ATV Alive and UFC Personal Trainer. We expect to report a net loss per share in the range of $0.50 to $0.60. This compares with a net loss per share of $0.21 a year ago. Our share count for the quarter is approximately 69 million. We expect Q2 revenues to be nearly double last year's $70 million. Warhammer 40,000 Space Marine and continued revenues from first quarter releases are the key drivers for the quarter. We expect to report second quarter operating results moderately better than Q of fiscal '12.
As we head into holiday, we anticipate Saint's Row III, WWE and uDraw for three platforms to deliver significantly higher net sales and profitability in our fiscal third quarter than the prior year.
are expecting a profitable Q4 with the return of the next installment of our UFC franchise. Accordingly, our operating model for fiscal '12 is as follows. Product costs as a percent of net sales, mid-3 0%s; software amortization as a percent of net sales, approximately 20% and, once again, software amortization will be significantly higher as a percent of net sales in the first half of the year than in the second half. License amortization and royalties as a percent of net sales about 5% to 6%. Product development expense of about $80 million for the year with about $45 million of expense in the first half of the year and $35 million in the second half of the year. Selling and marketing expense of approximately 16% to 18% of net sales for the year with significantly higher percentages in the first half of the year. G&A of approximately $50 million. Net interest expense of about $6 million, tax rate of 15% and finally share count of about 71 million.
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28. In response to these announcements, on May 4, 2011, the price of THQ
2 stock rose $0.30 per share, or 7%, to close at $4.42 per share, on heavy trading 3 I volume. 4 29. On June 3,2011, the Company issued a press release announcing that its
5 uDraw GameTablet "will come to the Xbox 360® and PlayStation®3 consoles" in the
6 fall of 2011. Defendant Farrell, commenting on the launch, stated, in pertinent part, as 7 I follows: 8 9 10 11 12 13 "As soon as we introduced uDraw last year, Xbox 360 and PS3 fans began asking when they could experience it, too - and beginning this fall, they can.... The uDraw offers amazing innovation and opens new doors of artistic possibility. There's no console-based artistic tool like it." 30. On July 27, 2011, THQ issued a press release announcing its financial
14 results for the fiscal first quarter of 2012, the period ended June 30, 2011. For the
15 quarter, the Company reported net sales of $195.2 million, and a net loss of $38.4
16 million, or $0.56 per diluted share. Defendant Farrell, commenting on the results, 17 stated, in pertinent part, as follows: 18 19 20 21 22 23 24 "We are disappointed in our first quarter financial performance. Sales of Red Faction: Armageddon and our licensed kids titles were below our expectations, and the late release of LTC Personal Trainer also adversely impacted the quarter. ... Despite a light first half, we
are looking forward to a strong and profitable second half, including what we expect to be the biggest third quarter, both in revenue and earnings per share, in our company's history, with proven franchises Saints Row, WWE and the uDraw GameTablet, all launching in November."
27 I With regard to the uDraw GameTablet, the press release stated, in pertinent part, as 28 I follows: -11 -
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Building on last year's successful launch of the uDraw GameTablet for Wii, THQ unveiled plans to bring uDrawTM to Xbox 360® and PlayStation® 3 high-definition consoles this fall with new creative functions and touch-screen features. The company is in production of a number of new uDraw titles, including Disney Princess, Marvel Super Hero Squad, and upgraded versions of our uDraw StudioTM software and Pictionary. 31. Following the press release, THQ held a conference call with analysts
9 and investors to discuss the earnings announcement and the Company's operations. 10 With regard to the Company's outlook, defendant Farrell, stated, in pertinent part, as 11 I follows: 12 13 14 15 16 17 18 19 20 21 22 23 24 We expect to demonstrate positive leverage in the second half of the year, with strong revenues and profitability driven by our robust lineup of proven franchises, including Saints Row, uDraw, and the latest
editions from WWE and UFC. In fact, we now expect our fiscal third quarter to be the biggest in terms of both revenue and profitability in the Company's history. * * *
Thanks, Paul. Now, I'd like to drill down on how we intend to deliver our strong second half performance.
Our confidence comes
from our upcoming titles based on four proven franchises; Saints Row the Third, WWE '12, uDraw for high-def consoles and Wii, and UFC
Undisputed 3. As we recently announced, Saints Row the Third is scheduled to hit stores on November 15, and based on the positive response we received from our Retail Partners at E3, and strong preorders, we feel this title has great potential. This high quality game is uniquely positioned in the holiday window, and we intend to support it with a robust and innovative marketing and PR campaign. Also this -12-
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holiday, we are launching WWE '12. Our signature WWE experience has been revamped with new technology and positioning, and more marketing synergy and integration with our long-time licensing partner. This title is being recognized by the game press as the next generation of WWE video games, and we're getting very positive fan response to the upgrades we've made.
We believe uDraw will perform well at holiday. We're gearing up for the launch in November of a slimmer and sleeker design of this innovative gaming accessory for the PS3 andX-Box 360, along with a new updated version for the Wii.
Throughout fiscal '12 we plan to
expand the uDraw library of games with the debut of 6 new titles. They include upcoming games based on the popular Disney Princess brand, a Marvel superhero squad title, and upgraded graded versions of our uDraw studio software, and Pictionary. As we discussed at E3, we're also working with Disney to bring the magic of classic Disney characters and animation to the world of uDraw. To round out the year, our fiscal fourth quarter will be anchored by the next major installment of our multi-million unit UFC franchise, UFC Undisputed 3. The new game is being enhanced to include new features, including a new mode based on the edgy pride fighting league, and game play that appeals to both the core and casual gamer. Our confidence in this title is underscored by the fact that the first 2 iterations of UFC have shipped more than 7 million units life-to-date, and this release will be hitting shelves more than 20 months after the last one.
25 In response to'a question regarding the uDraw GameTablet sales forecast, defendant
26 Farrell responded, in pertinent part, as follows: 27 28 [ARVIND BHATIA:] One more question, Brian. On uDraw, when you put it all together with the additional platforms, and the attach - 13 -
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rate that you expect to get on the Wii, et cetera, how much growth, big picture, are you expecting on that franchise versus last year? Can you give us a ballpark? [FARRELL:] That's a good question. I'm not sure people really focused on this yet. Let me remind everyone, last year we had the uDraw on the Wii format only, and only in North America. And in Q3, the holiday quarter - let me remind everyone that the uDraw is a very seasonally sensitive product, it's obviously very good for children, gift giving, family, that kind of thing, so it performed very well in Q3 of last
year. As we think about this year, we've actually planned Wii hardware units down, yet with the addition
of both 360 andPS3, and a
global launch of all three platforms, obviously there's a fairly significant increase in the amount of uDraw hardware we plan in this fiscal third quarter.
32. In reaction to the announcement, on July 28, 2011, the price of THQ
16 stock fell $0.48 per share, or 15%, to close at $2.72 per share, on heavy trading 17 volume. However, defendants continued to conceal the true scope of the problems at 18 the Company. 19 33. On September 28, 2011, the Company issued a press release announcing
20 that it had "entered into a four-year, asset-based credit facility with Wells Fargo 21 Capital Finance, LLC. The credit facility provides for borrowings up to $50 million 22 for working capital requirements, letters of credit and other general corporate 23 purposes, and increases to $75 million during the upcoming peak sales period." 24 Defendant Pucino, commenting on the new credit facility, stated, in pertinent part, as
25 I follows:
26 27 28 -14"We are pleased to establish this new, larger credit facility with Wells Fargo.... This new line, along with THQ's capacity to generate
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strong cash flows, provide the company with substantial financial flexibility as it executes on plans for growth in the coming years." 34. On November 2, 2011, THQ issued a press release announcing its financial results for the fiscal second quarter of 2012, the period ended September 30,
5 2011. For the quarter, the Company reported net sales of $146.0 million, and a net
6 loss of $92.4 million, or $1.35 per diluted share. Defendant Farrell, commenting on 7 the results, stated, in pertinent part, as follows: 8 9 10 11 12 13 14 "We are encouraged that our second quarter performance exceeded our expectations, particularly in a quarter with a light release schedule.... Our two biggest quarters of the year remain ahead of us, and we are focused on execution. In Q3 we are planning for the largest quarter in our history, in terms of sales and earnings, driven by Saints
Row: The Third, the uDraw GameTablet, and WWE '12. With UFC Undisputed 3 launching in the fourth quarter, we are well-positioned to
deliver a strong second half of fiscal 2012." 35. Following the press release, THQ held a conference call with analysts
17 I and investors to discuss the earnings announcement and the Company's operations. 18 I With regard to the Company's outlook, defendant Farrell, stated, in pertinent part, as 19 1 follows: 20 21 22 23 24 We are executing on our plan, and are excited about our near term slate of games, starting with the launch of Saints Row on November 15. Retail and consumer reaction has been very positive, and pre-orders are tracking more than 4 times those of Saints Row 2 at 2 weeks before launch. In addition to Saints Row, we are introducing uDraw for the HD consoles, as well as new version for the Wii, and a new WWE fighting game, featuring upgraded technology and a new look and feel. In the fiscal fourth quarter, we intend to launch the newly enhanced and more approachable UFC Undisputed 3. - 15 -
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I Defendant Pucino, commenting on the Company's guidance for the third quarter,
Now I would like to share with you our guidance for the balance of year. Starting with the third quarter of fiscal 2012, which we expect to be the largest quarter for sales and earnings in the Company's history. We expect to report net sales in the range of $510 million to $550 million, compared with $323 million a year ago. Key titles driving our results in the quarter include Saints Row The Third, uDraw and WWE '12. We expect to report third quarter earnings per share in the range of $1.20 to $1.50. This compares with earnings per share of $0.42 one year ago.
2 stated, in pertinent part, as follows: 3 4
12 With regard to the sales forecast for the uDraw GameTablet, defendant Farrell stated, 13 in pertinent part, as follows: 14 November 15 is also the date of the expansion of our successful uDraw game tablet, across all three gaming platforms in North America, Europe and Asia-Pacific. uDraw will come bundled with brand new instant artist software, and will be merchandised with 6 other titles, providing our consumer with a wide choice for this innovative game tablet. uDraw was recently named to Toy Insiders Hot 20 list of the most anticipated toys of this holiday season. And again, we're looking forward to uDraw being a popular gift item. Like last year, we expect sales of uDraw to ramp up from release through the holidays. Here's how we're thinking about uDraw. You will recall that last year, we introduced uDraw only on the Wii and only in North America, and while supply constrained, we shipped 1.3 million units in our third quarter.
For the third quarter offiscal '12, we expect to ship less than double that amount across all 3 consoles, and across our 3 major geographic territories.
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 18 of 36 Page ID #:22
In reaction to these announcements, on November 3, 2011, the price of
THQ stock rose $0.26 per share, or 12%, to close at $2.39 per share, on heavy trading I volume. 37. The statements referenced above in ¶ 26-27,29-31 and 34-3 5 were each
5 materially false and misleading when made because they misrepresented and failed to
6 disclose the following adverse facts, which were known to defendants or recklessly 7 disregarded by them: 8 (a) that demand for the Company's uDrawTMGameTabletTM was well
9 below internal expectations and the Company would have to take back, or provide 10 price protection, on hundreds of thousands of uDraw units that it had sold; 11 (b) that the uDrawTMGameTabletTM for the Microsoft Xbox 360® and
12 Sony PlayStation® 3 was a failure and not being purchased by owners of those 13 gaming systems; and 14 (c) as a result of the foregoing, defendants lacked a reasonable basis
15 for their positive statements about the Company and its prospects. 16 38. On December 7, 2011, THQ issued a press release updating its outlook
17 for the fiscal third quarter, the period ending December 31, 2011. For the quarter, the 18 Company expected to report net sales of approximately 25% below its previously 19 announced guidance of $510 million to $550 million, due to "weaker-than-expected 20 initial sales of its uDraw GameTablet® for Xbox 360@ and PlayStation® 3." 21 Defendant Farrell, commenting on the reduced outlook, stated, in pertinent part, as 22 1 follows: 23 24 "Despite uDraw's strong success on the Wii in fiscal 2011 and market research indicating strong demand for uDraw on Xbox 360 and PlayStation 3, initial sales of our uDraw tablet and software on these high-definition platforms have been weaker than expected.... WWE '120 and Saints Row®: The ThirdTM are expected to perform at or better than the levels we discussed on our fiscal 2012 second quarter -17-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 19 of 36 Page ID #:23
earnings call. As we continue to move through the third quarter, we are focused on driving sales of our key holiday titles and maximizing profitability." 39. In reaction to the announcement, on December 8, 2011, the price of THQ
5 I stock fell $0.56 per share, or 38%, to close at $0.90 per share, on extremely heavy
6 trading volume. However, defendants continued to conceal the true scope of the 7 I problems at the Company. 8 40. On January 25, 2012, the Company issued a press release announcing its
9 I updated business strategy whereby the Company would exit traditional kids' licensed
10 I video games and focus on its core video game franchises and digital initiatives for the 11 I future. In that regard, defendant Farrell stated, in pertinent part, as follows: 12 13 14 15 16 17 18 19 "THQ will be a more streamlined organization focused only on our strongest franchises.... The success of Saints Row®: The Thi rdTM is an example of what our revised strategy and focus can achieve. We have now shipped 3.8 million units globally and are currently expecting to ship between five and six million units lifetime on this title. Additionally, our robust digital content offerings for this game have resulted in the highest digital revenue of any console title in our history." 41. Then, on February 2, 2012, THQ issued a press release announcing its
20 financial results for the fiscal third quarter of 2012, the period ended December 31, 21 2011. For the quarter, the Company reported net sales of $404.4 million, and a net 22 loss of $55.9 million, or $0.82 per diluted share. Moreover, the Company announced 23 that it took a $30.3 million impairment charge on "kids movie-based licenses." 24 Defendant Farrell, commenting on the third quarter results and new business strategy,
25 stated, in pertinent part, as follows:
26 27 28 "Saints Row* The Third'M and 1VWE '12 demonstrate the strengths of THQ's core gaming capabilities. These titles performed at or better than the expectations we shared during our last investor
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 20 of 36 Page ID #:24
conference call, driven by favorable critical reviews, community engagement and outstanding marketing efforts. ... Sales of the uDraw GameTablet and related software, and other titles in the kids, family and casual category were far weaker than anticipated, substantially reducing our financial results for the quarter." "We have since concluded an extensive review of our operations to realign our business, focusing on our key franchises with the most potential.... We are implementing a plan to bring costs in line with our lower anticipated level of revenue. With our focused product plan, leaner cost structure, cash balance, and existing credit facility, we believe the company has adequate resources to execute on our plan and deliver on our strong multi-year pipeline of games."
13 With regard to the Company's business realignment, the press release stated, in 14 I pertinent part, as follows: 15 16 17 18 19 20 21 22 23 24 THQ announced recently that it is exiting development of traditional kids' licensed console games. The company has concluded negotiations with two licensors and is negotiating arrangements with two others. The company is also substantially eliminating its ongoing financial commitment with developers as it exits this business. Additionally, THQ has no future commitments or plans to manufacture uDraw hardware. THQ's strategy is to focus on its premium core and fighting franchises and to expand its digital revenues. As part of this business realignment, the company is implementing initiatives to streamline its organization and cost structure. The company currently expects these actions will result in a reduction in its annualized run rate of selling, general and administrative expenses of approximately $60 million, and a reduction of its annualized product development
_19-
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 21 of 36 Page ID #:25
expenditures of approximately $100 million, primarily due to its exit from the kids' licensed console games category. Total charges related to these actions are estimated at approximately $11.0 million, of which $2.5 million are non-cash. The majority of these charges are expected to be recorded by the end of the 2012 fiscal year and will be excluded from the company's non-GAAP results. 42. Following the press release, THQ held a conference call with analysts
9 and investors to discuss the earnings announcement and the Company's operations. 10 With regard to the Company's third quarter results, defendant Farrell, stated, in 11 pertinent part, as follows: 12 13 14
On our last call we told you we anticipated that our third quarter would be the largest in our Company's history. Unfortunately, we were wrong.
The disappointing performance of uDraw this holiday and
continued weakness in the kids' licensed category overshadowed the very successful releases of Saints Row The Third and WWE 12. UDraw
hardware and software sales were approximately $100 million below our plan and our other casual titles were approximate[lyJ $25 million below plan substantially reducing our revenue and profit for the quarter. We are confident that uDraw would resonate again this holiday
given last year's robust sell through and two independent studies indicating we were addressing a sizable market on the HD platforms.
Our confidence was misplaced.
What we had viewed to be a product
that would generate revenues and profits while we continued to build our portfolio of core gaming franchises has instead created a catalyst for us to evaluate our business from top to bottom. Here's what we've done to address these issues. First, we have ceased production of uDraw hardware and have developed a plan to -20-
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 22 of 36 Page ID #:26
move remaining inventory through the channel. We have no other remaining commitments with respect to uDraw. Second, last week we announced the refinement of our strategy to focus exclusively on high quality core games and connected experiences for our key franchises and are in the process of exiting the traditional kids' video game business. As part of our exit we have reached agreement with two of our licensors and are in ongoing discussions with two others. Additionally, we have substantially eliminated our development expenditures for this category. These two actions have significantly reduced our financial commitments as we exit this business.
11 With regard to uDraw GameTablet sales, defendant Pucino stated, in pertinent part, as 12 I follows: 13 14 Moving onto Q3 results, for the three months ended December 31, 2011, we reported net sales of $404 million. A 25% increase versus the prior year Q3. In line with our revised guidance. Our Q3 sales [were] driven primarily by our new releases, Saints Row The Third and WWE 12. Net sales [were] higher than the year ago quarter primarily due to sales of Saints Row The Third because there was no comparable core title in the year ago quarter. UDraw's under performance in the quarter had the single biggest impact on our financial results. As Brian mentioned, net sales of the tablet and related software were approximately $100 million below our expectations.
approximately 1 million tablets in the quarter and sell through was poor. Resulting in higher levels ofprice protection, inventory reserves and retail concessions. To give you context, our quarterly earnings
would have more than doubled without uDraw. We believe we are sufficiently reserved for units we have in inventory and we're working with our retail partners to move remaining units into the channel. -21-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 23 of 36 Page ID #:27
43. In reaction to these announcements, on February 3, 2012, the price of
2 1 THQ stock fell $0.23 per share, or 30%, to close at $0.53 per share, on extremely 3 heavy trading volume. 4 44. The market for THQ common stock was open, well-developed and
5 efficient at all relevant times. As a result of these materially false and misleading
6 statements and failures to disclose, THQ common stock traded at artificially inflated 7 prices during the Class Period. Plaintiff and other members of the Class purchased or 8 otherwise acquired THQ common stock relying upon the integrity of the market price 9 of THQ common stock and market information relating to THQ, and have been 10 damaged thereby. 11
During the Class Period, defendants materially misled the investing
12 public, thereby inflating the price of THQ common stock, by publicly issuing false 13 and misleading statements and omitting to disclose material facts necessary to make 14 defendants' statements, as set forth herein, not false and misleading. Said statements 15 and omissions were materially false and misleading in that they failed to disclose 16 material adverse information and misrepresented the truth about the Company, its 17 business and operations, as alleged herein. 18 46. At all relevant times, the material misrepresentations and omissions
19 particularized in this complaint directly or proximately caused, or were a substantial 20 contributing cause of, the damages sustained by plaintiff and other members of the 21 Class. As described herein, during the Class Period, defendants made or caused to be
22 made a series of materially false or misleading statements about THQ's business, 23 prospects and operations. These material misstatements and omissions had the cause 24 and effect of creating in the market an unrealistically positive assessment of THQ and
25 its business, prospects and operations, thus causing the Company's common stock to
26 be overvalued and artificially inflated at all relevant times. Defendants' materially 27 false and misleading statements during the Class Period resulted in plaintiff and other 28 -22-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 24 of 36 Page ID #:28
members of the Class purchasing the Company's common stock at artificially inflated
2 I prices, thus causing the damages complained of herein. 3 4 ADDITIONAL SCIENTER ALLEGATIONS 47. As alleged herein, defendants acted with scienter in that defendants knew
5 that the public documents and statements issued or disseminated in the name of the
6 Company were materially false and misleading; knew that such statements or 7 documents would be issued or disseminated to the investing public; and knowingly 8 and substantially participated or acquiesced in the issuance or dissemination of such 9 statements or documents as primary violations of the federal securities laws. As set 10 forth elsewhere herein in detail, defendants, by virtue of their receipt of information 11 reflecting the true facts regarding THQ, their control over, and/or receipt and/or 12 modification of THQ's allegedly materially misleading misstatements and/or their 13 associations with the Company, which made them privy to confidential proprietary 14 information concerning THQ, participated in the fraudulent scheme alleged herein. 15 48. Defendants were further motivated to engage in this course of conduct in
16 order to enable the Company to enter into a credit facility whereby the Company 17 could borrow up to $75 million in capital. 18 19 LOSS CAUSATION/ECONOMIC LOSS 49. During the Class Period, as detailed herein, defendants engaged in a
20 scheme to deceive the market and a course of conduct that artificially inflated the 21 price of THQ common stock and operated as a fraud or deceit on Class Period 22 purchasers of THQ common stock by failing to disclose and misrepresenting the 23 adverse facts detailed herein. When defendants' prior misrepresentations and 24 fraudulent conduct were disclosed and became apparent to the market, the price of
25 THQ common stock fell precipitously as the prior artificial inflation came out of the
26 stock price. As a result of their purchases of THQ common stock during the Class 27 Period, plaintiff and the other Class members suffered economic loss, i.e., damages, 28 under the federal securities laws. -23-
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 25 of 36 Page ID #:29
By failing to disclose to investors the adverse facts detailed herein,
defendants presented a misleading picture of THQ's business and prospects. Defendants' false and misleading statements had the intended effect and caused THQ common stock to trade at artificially inflated levels throughout the Class Period, reaching as high as $4.59 per share on May 10, 2011. 51. As a direct result of defendants' disclosures on December 7, 2011 and February 2, 2012, the price of THQ common stock fell precipitously, falling from its closing price of$ 1.46 per share on December 7, 2011 to $0.53 per share on February 9 3, 2012 - a loss of $0.93 per share, or 64%. These drops removed the inflation from 10 the price of THQ common stock, causing real economic loss to investors who had 11 purchased THQ common stock during the Class Period. 12 52. The 64% decline was a direct result of the nature and extent of
13 defendants' fraud finally being revealed to investors and the market. The timing and 14 magnitude of the price decline in THQ common stock negates any inference that the
15 loss suffered by plaintiff and the other Class members was caused by changed market
16 I conditions, macroeconomic or industry factors or Company-specific facts unrelated to 17 defendants' fraudulent conduct. The economic loss, i.e., damages, suffered by 18 plaintiff and the other Class members was a direct result of defendants' fraudulent 19 I scheme to artificially inflate the prices of THQ common stock and the subsequent 20 I significant decline in the value of THQ common stock when defendants' prior 21 I misrepresentations and other fraudulent conduct were revealed. 22 23 24
APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD ON THE MARKET DOCTRINE
53. At all relevant times, the market for THQ common stock was an efficient market for the following reasons, among others: (a) THQ common stock met the requirements for listing, and was
I listed and actively traded on the NASDAQ, a highly efficient and automated market;
12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 26 of 36 Page ID #:30
(b) as a regulated issuer, THQ filed periodic public reports with the
2 SEC and the NASDAQ; 3 (c) THQ regularly communicated with public investors via established
4 market communication mechanisms, including regular disseminations of press
5 releases on the national circuits of major newswire services and other wide-ranging
6 public disclosures, such as communications with the financial press and other similar 7 reporting services; and 8 (d) THQ was followed by several securities analysts employed by
9 major brokerage firms who wrote reports which were distributed to the sales force and 10 certain customers of their respective brokerage firms. Each of these reports was 11 publicly available and entered the public marketplace. 12
As a result of the foregoing, the market for THQ common stock promptly
13 digested current information regarding THQ from all publicly available sources and 14 reflected such information in the prices of the stock. Under these circumstances, all 15 purchasers of THQ common stock during the Class Period suffered similar injury 16 through their purchase of THQ common stock at artificially inflated prices and a 17 presumption of reliance applies. 18 19 NO SAFE HARBOR
The statutory safe harbor provided for forward-looking statements under
20 certain circumstances does not apply to any of the allegedly false statements pleaded 21 in this complaint. Many of the specific statements pleaded herein were not identified 22 as "forward-looking statements" when made. To the extent there were any forward23 looking statements, there were no meaningful cautionary statements identifying 24 important factors that could cause actual results to differ materially from those in the
25 purportedly forward-looking statements. Alternatively, to the extent that the statutory
26 safe harbor does apply to any forward-looking statements pleaded herein, defendants 27 are liable for those false forward-looking statements because at the time each of those 28 forward-looking statements were made, the particular speaker knew that the particular - 25 -
Case :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 27 of 36 Page ID #:31
I forward-looking statement was false, and/or the forward-looking statement was
2 authorized and/or approved by an executive officer of THQ who knew that those 3 1 statements were false when made. 4 COUNT! Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants 56. Plaintiff repeats and realleges each and every allegation contained above
8 as if fully set forth herein. 9 57. During the Class Period, defendants disseminated or approved the
10 materially false and misleading statements specified above, which they knew or 11 deliberately disregarded were misleading in that they contained misrepresentations 12 and failed to disclose material facts necessary in order to make the statements made, 13 in light of the circumstances under which they were made, not misleading. 14 58. Defendants: (a) employed devices, schemes, and artifices to defraud; (b)
15 1 made untrue statements of material fact and/or omitted to state material facts 16 I necessary to make the statements made not misleading; and (c) engaged in acts, 17 practices, and a course of business which operated as a fraud and deceit upon the 18 purchasers of the Company's common stock during the Class Period. 19 59. Plaintiff and the Class have suffered damages in that, in reliance on the
20 integrity of the market, they paid artificially inflated prices for THQ common stock. 21 Plaintiff and the Class would not have purchased THQ common stock at the prices 22 they paid, or at all, if they had been aware that the market prices had been artificially 23 and falsely inflated by defendants' misleading statements. 24 60. As a direct and proximate result of defendants' wrongful conduct,
25 plaintiff and the other members of the Class suffered damages in connection with their
26 purchases of THQ common stock during the Class Period. 27 28 -26-
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 28 of 36 Page ID #:32
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 61.
Violation of Section 20(a) of the Exchange Act Against All Defendants Plaintiff repeats and realleges each and every allegation contained above
as if fully set forth herein. 62. The Individual Defendants acted as controlling persons of THQ within
the meaning of §20(a) of the Exchange Act as alleged herein. By reason of their positions as officers and/or directors of THQ, and their ownership of THQ stock, the Individual Defendants had the power and authority to cause THQ to engage in the wrongful conduct complained of herein. THQ controlled the Individual Defendants and all of its other employees. By reason of such conduct, defendants are liable pursuant to §20(a) of the Exchange Act. PRAYER FOR RELIEF WHEREFORE, plaintiff prays for relief and judgment, as follows: A. Determining that this action is a proper class action and certifying
plaintiff as a class representative under Rule 23 of the Federal Rules of Civil Procedure; B. Awarding compensatory damages in favor of plaintiff and the other Class
members against all defendants, jointly and severally, for all damages sustained as a result of defendants' wrongdoing, in an amount to be proven at trial, including interest thereon; C. Awarding plaintiff and the Class their reasonable costs and expenses
incurred in this action, including counsel fees and expert fees; and D. I Court. Such equitable/injunctive or other relief as deemed appropriate by the
Case 2 :12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 29 of 36 Page ID #:33
3 DATED: June 15, 2012 4 5
JURY DEMAND Plaintiff hereby demands a trial by jury. ROBBINS GELLERRUDMAN & DOWD LLP DARREN J. ROBBINS DAVID C. WALTON
(2, ~J WALTON DAVID C.
Telephone: 619/231-1058 619/231-7423 (fax) ROBBINS GELLER RUDMAN & DOWD LLP
SAMUEL H. RUDMAN MARIO ALBA JR. 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631/367-7100 631/367-1173 (fax) DYER & BERENS LLP JEFFREY A. BERENS 303 East 17th Avenue, Suite 300 Denver, CO 80203 Telephone: 303/861-1764 303/395-0393 (fax) HOLZER, HOLZER & FISTEL, LLC MICHAEL I. FISTEL, JR. MARSHALL DEES 200 Ashford Center North, Suite 300 Atlanta, GA 30338 Telephone: 770/392-0090 770/392-0029 (fax) Attorneys for Plaintiff
I S:\CptDraft\Securities\Cpt THQ 12.doc
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 30 of 36 Page ID #:34
CERTIFICATION OF NAMED PLAINTIFF PURSUANT TO FEDERAL SECURITIES LAWS The undersigned declares, as to the claims asserted under the federal securities laws, that: Plaintiff has reviewed the complaint and authorized its filing. Plaintiff did not purchase and/or acquire the security that is the subject of this action at the direction of Plaintiffs counsel or in order to participate in any private action under the federal securities laws. Plaintiff is willing to serve as a representative party on behalf of the class, including providing testimony at deposition and trial, if necessary. I understand that this is not a claim form, and that my ability to share in any recovery as a member of the class is not dependent upon execution of this Plaintiff Certification. Plaintiffs transactions in the security that is the subject of this action during the Class Period are as follows: Purchases: Name of Company Date(s) Purchased See Attached Schedule A. # Shares Purchased Cost
Sales: Name of Company Date(s) Sold See Attached Schedule A. # Shares Sold Proceeds
During the three (3) years prior to the date of this certification, Plaintiff has not sought to serve or served as a class representative in an action filed under the federal securities laws except for the following (if any):
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 31 of 36 Page ID #:35
Plaintiff will not accept any payment for serving as a representative party on behalf of the class beyond Plaintiffs pro rata share of any recovery, except such reasonable costs and expenses (including lost wages) directly relating to the representation of the class as ordered or approved by the court. I declare under penalty of perjury that the foregoing is true and correct. Executed this 13 day of June 2012 in North Hollywood City CA State
(Signature) (Print Name) Khalil Zaghian
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 32 of 36 Page ID #:36
SCHEDULE A CLASS PERIOD PURCHASES Date Shares Price/Share Cost $1,160.00 $495.00 $172.50 $7,100.00 $820.00 $1,026.00 $121.50 $4,800.00 $720.00 $1,650.00 $644.00 $495.00 $173.00 $197.00 $227.00 $1,646.80 $2,080.00 $254.10 $1,992.00 $2,016.00 $2,952.00 $634.00 $343.00 $1,344.00 $1,770.00 $3,610.00 $1,020.00 $1,032.50
2/3/2012 1/31/2012 1/19/2012 1/12/2012 12/20/2011 12/14/2011 12/13/2011 12/8/2011 12/7/2011 12/6/2011 12/1/2011 11/30/2011 11/29/2011 11/22/2011 11/16/2011 8/16/2011 8/9/2011 8/2/2011 7/28/2011 7/28/2011 7/28/2011 7/21/2011 6/24/2011 6/16/2011 6/13/2011 6/8/2011 5/19/2011 5/17/2011
2000 750 250 10000 1000 1350 150 5000 500 1000 400 300 100 100 100 895 1000 105 800 800 1200 200 100 400 500 1000 250 250
$0.58 $0.66 $0.69 $0.71 $0.82 $0.76 $0.81 $0.96 $1.44 $1.65 $1.61 $1.65
1.I.)
$1.97 $2.27 $1.84 $2.08 $2.42 $2.49 $2.52 $2.46 $3.17 $3. 43 $3.36 $3.54 $4.08
A 1 'I . I
CLASS PERIOD SALES Date Shares Price/Share Proceeds $2,260.00
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 33 of 36 Page ID #:37
This ease has been assigned to District Judge Gary A. Feess and the assigned discovery Magistrate Judge is John E. Mcflennott.
The case number on all documents filed with the Court should read as follows: CV12- 5227 GAP (JEMx)
Pursuant to General Order 05-07 of the United States District Court for the Central District of California, the Magistrate Judge has been desited to hear discovery related motions.
All discovery related motions should be noticed on the calendar of the Magistrate Judge
A copy of this notice must be served with the summons and complaint on all defendants (if a removal action is filed, a copy of this notice must be served on all plaintiffs).
Subsequent documents must be filed at the following location; pq Western Division
312 N. Spring St., Rm. 0-8
411 West Fourth St., Rm. 1-053
Santa Ma, CA 92701-4515
Eastern Division 3410 Twelfth St., Rm. 134
Failure to file at the proper location will result in your documents being returned to you
CV-18 (03/06)
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 34 of 36 Page ID #:38
Name & Address;
ZAGHIAN, All Others Similarly Situated,
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA on Jietlaitot I CASE NUMBEA
CV12 5227 GAF (JTEMx)
THQ INC., 131iAN J. FARRELL and PAUL J. PUCINO,
TO: DEFENDANT(S): A lawsuit has been filed against you.
Within. 21 - days after service of this summons on you (not counting the day you received it), you must serve on the plaintiff an answer to the attached I'oomplaint 0 amended complaint El counterclaim El cross-claim or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiffs attorney, David C. Walton . whose address is Robbins Geller, et al., 655 W. Broadway, Ste. 1900, San Diego, CA 92101 619/231-1058. If you fill to do 80, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court.
Clerk. U.S. District Court Dated:
!UN 1'B
DOME U61
fUie 60 days the defendant lithe United Slates or a United Slates agency, or is an offlce' or employee of the UnUedStae.s. 60 diyi by Thde 12('a)(3)].
CV-01A(10/11
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 35 of 36 Page ID #:39
CIVIL COVER SHEET 1(a) PLAINTIFFS (Check bov iyiu are representing yoursc1t ,
KHAL.IL ZAO}UAN, Individually and on Behalf of All Others Similarly Situated
DEFENI)ANTS ThQ INC.. BRXkN l. FARRELL and PAUL 3. PUCINO
(b) Attorneys (Finn Name. Address and Telephone J1umbei. If you arc representing yourself provide saint.) David C. Walton (167261) Robbins Geller Rodman & Doid EL? 655 West Broadway. Suite 1900. San Diego, CA 92101 IL BASIS OF JUIUSJ)ICTION (Place an X in one box only.) D i U,S, Government Plaintiff 813 Federal Question (U.S. Government Not a ?arty)
6191231-1058 ILL CI'tIZSHTP OP PII1NC2PAL PARTIES - For Diversity Cases Only (Place an X in one box for plaintiff and one for defendant.) Citizen of This State PTP DEF FTF DAY 01 01 Incorporated or Principal Place 94 (34 of Business in this State 02 02 lncorporaiedaiviPrincipslPlace 05 05 of Bun Incas in Another State 06 D
02 (iS. Government Defendant 04 Diversity (Indicate Citizenship Citizen of Another Stem o! Pasties in Item 111) 1'V. OItIGTN (Place an X in one box only.)
CivizenorSobjectofaForeignCc,wstcy 03 03 Forei gn Nation -. 1 Original Proceeding
02 Removed ftom 93 Remiiatided from 04 Raiss*at.d or OS Transferred from another district (specify): 06 Multi07 Appeal to District State Court Appellate Court Reopened Judge from Distinct Magistrate Judge Litigation MA?Th 'Yca 0 No (Chock 'Yea' only if demanded 9 No
V. RZQXMSTM IN COMPLAINT: JURY CLASS ACIION wrde F.P..C, 2
complaint.)
9 MONEY DEMANDED IN COMPLAINT S____________________
VI. CAUSE OF ACTION (Cite tha US. Civil Statute under whichyou are filing and write a brief Statotoent of cause. Do nor cite jurisdictional statutes unless diversity.) COMPLAINT FOR VIOLATION OF THE PDRAL SECUR1TIS LAWS 15 U.&( 78j(e) and 78t(a) VIL NATURE OF SUrF ('ince In one box only.) am D 400 Stare Reapportionment
0410 Antitrust
0430 Banks and Banking o 450 CominerceflCC Ratea/etc, 9460 Deportation 0470 Racketeer Influenced and Cormpt Organizations C 40 Consumer Credit
0490 Cable/Sat TV
10 Selective Service 50 Securitics/ConunodUes Exchange o 575 Customer Chaflenge 12 USC 3410 9890 Other Statutory Actions 0891 Agricultural Act 0892 Economic Stabilization Act 13853 Environmental Matters C] 894 Energy A41ocaticum Act 0895 Freedom of Ink. Act 09(x) Appeal of Fee Determination Under Equal Access to Justice 0950 Constitutionality of Slate Statutes
110 Insurance 120 Marine 130 Miller Act 140 Negotiable Instrument 150 Recoreryof Overpayment & Enforcement of Judgment 151 Medicare Act 152 Recovery of Defaulted Student Loan (Excl. Veterans) 153 Recovery of Overpayment f Veteran's Benefits 160 Stockholders' Suits 190 Other COIWSCt 195 Contract Product Liability 210 Land Condemnation 220 Foreclosure 230 Rent Lease& Ejectment 240 Torts to Land 245 Tort Product Liability 290 All Other Reel Property
0310 Airplane 0315 A44 Product Liability 0 320 A5s5s4t Libel & Slander 0330 Fed. Employers' Liability O 340 Ma 034$ Marine Product Liability 0350 Motor Vehicle cl 553 Motor Veiicl. Product Liability 0360 OtherPersocil Injury 13362 Personal InjuryMod Malpractice 3365 Personal InjuryProduct Liability 0368 Asbestos Personal Injury Product Naturalization Application 463 Habeas CorpusAlian DelaipCC
?R.OPE3trY 370 Other Fraud 371 Truth in Lending 380 Other Peronal Property I)ainago 38$ Property Damage
422 Appeal 28 US(
510 Motions to Vacate Sentence habeas Corpus 530 GenetsI 535 Death Penalty 540 Mandamus/ Other $50 Civil Rights 555 Prison Condition 610 AgricuLture 620 Other Food & Drug 625 Drug Related Seizure of Property 21 USC gal 630 Li400rLaws 640 R.R. & 'truck 50 Airline Rags 660 Occupational SafCry/Health 690 Other
158 423 Withdrawal 28
441 Voting 442 Employment 443 HousingfAcco-
710 Faji Labor Standards Act 720 Lnbar/Mg,nt. Relations 730 Lalmor/Mgmt Reporting & Disclosure Act 740 Railway Labor Act 790 Other Labor Litigation 791 EmpL Ret. Inc. 820 Copyrights 130 Patent 3 26 HIA(1395ff) 1962 Black Lung (923) 3863 DIWC1DIYA5I (405(g)) 3864 SSID Title XVI
mmodatioris
444 Welfare
465 Other Immigration
445 American with Disabilities Employment 446 American with Disabilities Other 440 Other Civil Rights
3890 Taxes (U.S. Plaintiff
or Defendant) 3871 IRS-Third Paxty26 USC 7609
FOR OFFICE USE ONLY: Case Number
CV12 5227 GAF (JEMx) . ..
AFTER COPLETINC TAR FRONT SifIEOF FORM CV.II, COMPLETE THE INFORMATION REQUESTED BELOW.
CV-71 (05108)
. CIViL COYRE SHEET
Pagel of 2
Case 2:12-cv-05227-GAF-JEM Document 1 Filed 06/15/12 Page 36 of 36 Page ID #:40
CIVIL COVER SHEET VIH(a). IDENTICAL CASES: Has this action been previously filed in this court and dismissed, remanded or closed? E"No U Yes If yes, list case number(s): VHI(b). RELATED CASES: Have any cases been previously filed in this court that are related to the present case? MNo U Yes If yes, list case number(s): Civil cases are deemed related if a previously filed case and the present case: (Check all boxes that apply) U A. Arise from the same or closely related transactions, happenings, or events; or U B. Call for determination of the same or substantially related or similar questions of law and fact; or U C. For other reasons would entail substantial duplication of labor if heard by different judges; or U D. Involve the same patent, trademark or copyright, and one of the factors identified above in a, b or c also is present. IX. VENUE: (When completing the following information, use an additional sheet if necessary.) (a) List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH named plaintiff resides. U Check here if the government, its agencies or employees is a named plaintiff. If this box is checked, go to item (b). County in this District:* Angeles California County outside of this District; State, if other than California; or Foreign Country
(b) List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH named defendant resides. U Check here if the government, its agencies or employees is a named defendant. If this box is checked, go to item (c). County in this District:* Los Angeles California County outside of this District; State, if other than California; or Foreign Country
(c) List the County in this District; California County outside of this District; State if other than California; or Foreign Country, in which EACH claim arose. Note: In land condemnation cases, use the location of the tract of land involved. County in this Di strict:* Angeles California County outside of this District; State, if other than California; or Foreign Country
*Los Angeles, Orange, San Bernardino, Riverside, Ventura, Santa Barbara, or San Luis Obispo Counties Date June 15, 2012
X. SIGNATURE OF ATTORNEY (OR PRO PER):
Notice to Counsel/Parties: The CV-71 (JS-44) Civil Cover Sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required bylaw. This form, approved by the Judicial Conference of the United States in September 1974, is required pursuant to Local Rule 3-I is not filed but is used by the Clerk of the Court for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet.) Key to Statistical codes relating to Social Security Cases: Nature of Suit Code Abbreviation Substantive Statement of Cause of Action All claims for health insurance benefits (Medicare) under Title 18, Part A, of the Social Security Act, as amended. Also, include claims by hospitals, skilled nursing facilities, etc., for certification as providers of services under the program. (42 U.S.C. 1935FF(b)) All claims for "Black Lung" benefits under Title 4, Part B, of the Federal Coal Mine Health and Safety Act of 1969. (30 U.S.C. 923) All claims filed by insured workers for disability insurance benefits under Title 2 of the Social Security Act, as amended; plus all claims filed for child's insurance benefits based on disability. (42 U.S.C. 405(g)) All claims filed for widows or widowers insurance benefits based on disability under Title 2 of the Social Security Act, as amended. (42 U.S.C. 405(g)) All claims for supplemental security income payments based upon disability filed under Title 16 of the Social Security Act, as amended. All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42 U.S.C. (g)) Page 2 of 2
CV-71 (05/08)
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