The complaint alleges that Action Performance and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by publicly disseminating false and misleading statements regarding the Company's business, financial condition and future prospects. The complaint further alleges that defendants misrepresented that the Company would recognize revenue from an $8 million sale to Home Depot in the fourth quarter of its fiscal year1999 ending September 30, 1999, but failed to disclose that the revenue could not be recognized until the following quarter. These false and misleading statements artificially inflated the price of Action Performance common stock during the Class Period. On November 4, 1999, the Company announced its financial results for the fourth quarter 1999 were far short of the expectations fostered by defendants' earlier positive statements. As a result, the Company's stock price plummeted from $24-7/8 to close at $12-1/4 per share that day, losing 51% of its value in a single day.

Update

On March 8, 2000, the Court consolidated all of the securities fraud actions against Action Performance arising from these facts into one consolidated class action and directed plaintiffs to file a consolidated complaint. On March 22, 2000, the Court appointed the Action Performance Plaintiffs Group as Lead Plaintiffs in the action, and appointed the law firms of Milberg Weiss Bershad Hynes & Lerach LLP, and Cohen, Milstein, Hausfeld & Toll P.L.L.C. as Co-lead Counsel for Lead Plaintiffs and the firm of Bonnett, Fairbourn, Friedman & Balint, P.C. as Liaison Counsel.

On July 10, 2001, the Court granted defendants' motion to dismiss with leave to amend and directed plaintiffs to file an amended complaint within thirty (30) days.

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