Two class action suits, one filed by Cauley & Geller, the other by Milberg Weiss Bershad Hynes & Lerach, have been filed against Insurance Management Solutions Group on behalf of all individuals and institutional investors that purchased securities pursuant or traceable to the company’s Feb. 11, 1999 initial public offering.
Both complaints were filed in the U.S.District Court for the Middle District of Florida, and charge that the company and some of its officers and directors violated the federal securities laws by providing a materially false and misleading registration statement and prospectus.
Specifically, the complaints allege that the prospectus was materially false and misleading because it failed to disclose: the flood mapping business was not compatible with INMG’s outsourcing services and synergies could not possibly be realized causing expected future growth to be well-below INMG’s estimates; as a result of the incompatible nature of the two lines of business, few if any cross-over selling opportunities existed, further impacting future growth expectations; INMG’s problems integrating these two lines of business prevented INMG from consolidating Geotrac of America, Inc. into its operations and accessing Geotrac’s customer base to generate additional revenue; and as a result of the foregoing, the defendants had no reasonable basis to conclude that INMG expected to experience significant growth in its business and revenues.
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