Midway Games has been slapped with a class-action lawsuit over charges of financial impropriety and deceptive management practices.
In a statement issued by law firm Schiffrin Barroway Topaz & Kessler, LLP, notification was given of the class action suit filed in the U.S. District Court of the Northern District of Illinois on behalf of all common stock purchasers of Midway Games from August 4, 2005 to May 24, 2006.
The suit claims that Midway games and “certain of its officers and directors” violated the Securities Exchange Act of 1934 by failing to disclose and misrepresenting facts which were either known to the defendants or recklessly disregarded by them. The complaint alleges that Midway was “grossly underperforming” due to operational difficulties, the result of which would force the company into a restructuring program costing over $17 million, and that the company would have to secure debt financing in order to gain much-needed capital in order to continue operations. As a result, the suit charges that Midway’s financial and operational statements were lacking in “any reasonable basis” when made.
Between December 16, 2005 and May 24, 2006, according to the statement, Midway disclosed information regarding the true state of its operations which caused the company’s share price to drop from $23.25 to $7.39, a decline of 67 percent.
An arcade powerhouse throughout the 1980s, Midway became famous for coin-op machines beginning with Space Invaders and continuing through Pac-Man, Tron, Mortal Kombat and others. In recent years, however, the company has struggled, shutting down several of its studios and suffering massive financial losses.
More information, including contact information for interested parties, is available at the Schiffrin Barroway Topaz and Kessler website.