UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JOHN GILPIN, On behalf of Himself and All
Others Similarly situated,
Plaintiff,
vs.
HITSGALORE.COM INC., and STEVE BRADFORD,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
CASE NO.
CLASS ACTION
CLASS ACTION
COMPLAINT
FOR THE VIOLATION OF
FEDERAL SECURITIES
LAWS
JURY TRIAL DEMANDED
Plaintiff, individually and on behalf of all others similarly situated, by
and through his attorneys, alleges the following upon the investigation
made by and through plaintiff's counsel.
I. PRELIMINARY STATEMENT
1. For over a period of many months, defendants have concealed from the
investing public the fact that they have continuously been committing
gross violations of the federal securities laws, including misleading the
public as to the current business affairs of defendant Hitsgalore.com,
Inc. ("Hitsgalore" or the "Company").
2. Throughout the Class Period of February 17, 1999 to May 12, 1999,
defendants disseminated materially false and misleading statements
regarding the Company's current business condition. Specifically, while
making positive statements about the strength and growth of the
Company, the defendants were aware, but failed to disclose, that its
founder, Dorian Reed, along with two other individuals, had been ordered
to pay over $600,000 to 100 customers for "false claims made by
Internet Business Broadcasting, a failed online advertising company they
worked for." The above revelation was in direct contravention to
defendants' previous representations. On May 11, 1999, Bloomberg
reported that "[o]n Feb. 11, Hitsgalore.com went public by merging with
Systems Communications Inc., a publicly traded shell company. In the
merger agreement, filed with the SEC, Hitsgalore.com said there were no
suits or governmental investigations against any of its officers,
directors or employees. It didn't disclose the FTC's case against Reed in
its subsequent SEC filings."
3. When the truth of defendants' deception was finally revealed to the
public on May 11, 1999, the market's reaction was quick and dramatic. In
direct response to the above news, Hitsgalore shares plummeted 53% or
$10 3/4 to $9 3/8, on volume of 3.65 million shares, ten times the
average daily volume for the past thirty days.
4. As a result of defendants' deceptive and illegal conduct, plaintiff and
other class members purchased their Hitsgalore shares at grossly
inflated prices. Had plaintiff and the other class members been aware of
the true condition of Hitsgalore, they would not have purchased their
Hitsgalore shares or at least not at the inflated prices at which they
purchased those shares.
from secfraud.com |
