U.S. Diagnostic announced last week that it has reached an agreement to settle all of the class-action lawsuits filed against the company earlier this year related to its use of a mergers and acquisitions consultant who had a past history that included a
U.S. Diagnostic announced last week that it has reached an agreement to settle all of the class-action lawsuits filed against the company earlier this year related to its use of a mergers and acquisitions consultant who had a past history that included a fraud conviction. The West Palm Beach, FL, imaging services provider said it had agreed to pay a total of $5.9 million to settle the suits.
The lawsuits were related to revelations made in December, when investment house Bear, Stearns & Co. announced that it had discovered that USDL had not disclosed the criminal conviction of Keith Greenberg, a mergers and acquisition consultant who had helped shape USDL's rapid growth strategy. In addition to the shareholder lawsuits, the revelations sparked investigations by the NASDAQ stock exchange and the Securities and Exchange Commission, and also resulted in the departure of USDL chairman and CEO Jeffrey Goffman (SCAN 4/16/97).
The settlement of the lawsuits removes a cloud hanging over USDL that had hindered the company's ability to secure new financing, which would enable it to continue its aggressive acquisition strategy. With the suits out of the way, USDL expects to resume its consolidation activity, according to president and CEO Joseph Paul.
"That was the last big hurdle in our way keeping us from putting together additional financing to resume our acquisition program," Paul said.
The SEC investigation is still pending, but USDL is confident that the company will be found blameless, as the actions under investigation by the agency were committed by individuals who are no longer with the firm.
"Some of the individuals involved in that will have some problems, but as it would relate to the company, we don't feel that will be an issue," Paul said.
In other good news for USDL, the company reported last month that NASDAQ's Listings Qualifications Panel has concluded that USDL will remain listed on its National Market System exchange. NASDAQ had told USDL in May that it might be delisted, due to lack of compliance with the exchange's net tangible assets requirements.