SOURCE: Kaplan Fox & Kilsheimer LLP

September 14, 2010 18:00 ET

Kaplan Fox Files Securities Class Action on Behalf of Purchasers of DG FastChannel, Inc. Common Stock

NEW YORK, NY--(Marketwire - September 14, 2010) -  Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) has filed a class action suit against DG FastChannel, Inc. ("DG FastChannel" or the "Company") (NASDAQ: DGIT) that alleges violations of the Securities Exchange Act of 1934 and the Securities Act of 1933 on behalf of purchasers of DG FastChannel's common stock during the period February 16, 2010 and August 29, 2010, inclusive, including investors who purchased DG FastChannel common stock in the Company's April 8, 2010 public offering of common stock (the "Class").

The case is pending in the United States District Court for the Southern District of New York. A copy of the complaint may be obtained from Kaplan Fox or the Court.

The Complaint alleges that throughout the Class Period the Company reported record revenues and earnings, but failed to disclose material adverse conditions that were affecting the Company; specifically, the Company failed to disclose that the Company was being materially adversely affected due to a material shift in customer mix for the Company's Pathfire service, and, as a result of seasonality between the second and third quarters, there was a material decline in the Company's Standard Definition ("SD") business.

The Complaint further alleges that, the Company's stock materially increased based on the Defendants' positive statements about the Company's prospects, reaching a 52-week high of $44.19 on June 3, 2010 and that defendants took advantage of the increased stock price. The Complaint alleges that after the beginning of the Class Period "Defendants Ginsburg and Choucair began selling their personal DG FastChannel shares at inflated prices. During the Class Period, Ginsburg sold approximately 1,085,484 shares for proceeds of approximately $39.7 million, and Defendant Choucair sold 23,666 shares for proceeds of approximately $1 million. Further, on April 8, 2010, the Company sold approximately $108 million in common stock in a public offering at a price of $31.50 per share."

The Complaint further alleges that the material facts adversely affecting the Company were not disclosed until August 30, 2010, when, before the opening of trading, DG FastChannel issued a press release that, stated, in part, "[w]hile DG FastChannel's pricing has remained stable and the HD business is strong, we are seeing normal seasonality in our SD volumes following a particularly strong Q2. This seasonality is being exaggerated by the strong rebound in spending from the second to third quarter in 2009, which masked the normal seasonality. In addition, the shift in our customer mix as we transition the Company's Pathfire long-form platform from a wholesale to a full service business model has put short term pressure on revenues, but we expect that our new customer acquisitions will start to contribute in the fourth quarter..."

On August 30, 2010, shares of DG FastChannel declined from a close on August 29, 2010 of $24.54 per share, to close at $15.11 per share, a decline of $9.43 per share or approximately 38% on heavier than usual volume.

If you are a member of the proposed Class, you may move the court no later than November 12, 2010 to serve as a lead plaintiff for the Class. You need not seek to become a lead plaintiff in order to share in any possible recovery.

Plaintiff seeks to recover damages on behalf of the Class and is represented by Kaplan Fox & Kilsheimer LLP. Our firm, with offices in New York, San Francisco, Los Angeles, Chicago and New Jersey, has many years of experience in prosecuting investor class actions and actions involving financial fraud. For more information about Kaplan Fox & Kilsheimer LLP, or to review a copy of the complaint filed in this action, you may visit our website at www.kaplanfox.com

Contact Information

  • If you have any questions about this Notice, the action, your rights, or your interests, please contact:

    Jeffrey P. Campisi
    KAPLAN FOX & KILSHEIMER LLP
    850 Third Avenue, 14th Floor
    New York, New York 10022
    (800) 290-1952
    (212) 687-1980
    Fax: (212) 687-7714
    E-mail address: jcampisi@kaplanfox.com

    Laurence D. King
    KAPLAN FOX & KILSHEIMER LLP
    350 Sansome Street, Suite 400
    San Francisco, California 94104
    (415) 772-4700
    Fax: (415) 772-4707
    E-mail address: lking@kaplanfox.com