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The sellers of several small telecommunications companies had suffered huge financial losses due to the fraudulent acts of the purchaser of their enterprises.  Ten individuals had sold their local telecommunications companies to a Fortune 500 company as part of an industry “roll-up.”  Half of the consideration received for the sale was stock in a subsidiary of the acquiring company.  Before the sellers could realize any value in this consideration, the acquirer filed for Chapter 11 bankruptcy and the stock became worthless. 

The case presented complex legal issues under both federal and state securities laws, including the application of the Sarbanes-Oxley Act of 2002 and the Private Securities Litigation Reform Act of 1995.  The case was settled with the defendants’ insurer, and the plaintiffs were awarded damages of $2 million, despite the effort of the purchaser to file for bankruptcy protection.