Quality Systems, Inc. Issues Special Bulletin Announcing That Prohibited Trading by Ahmed Hussein Contributed to QSI Share Price Decline
IRVINE, Calif.--(BUSINESS WIRE)--
Systems, Inc. (NASDAQ: QSII) announced today that it has issued a
special bulletin to its shareholders announcing its belief that
prohibited trading by Ahmed Hussein contributed to QSI share price
decline. The special bulletin appears below:
*** SPECIAL BULLETIN FOR QSI SHAREHOLDERS***
PROHIBITED TRADING BY AHMED HUSSEIN CONTRIBUTED TO QSI SHARE PRICE
Sale of More than 1.45 Percent of QSI Stock Jeopardizes Shareholder
Actions in Direct Violation of Company Policy
In our July 23rd letter, we alerted you to the fact that
Ahmed Hussein, a dissident member of the Quality Systems Board, and a
shareholder in the company who has proposed a slate of director nominees
to take over seven of the nine seats on our Board, pledged all of his
shares of QSI as collateral in margin accounts in flagrant violation
of QSI's insider trading policy. In that letter, we also told you
that we adopted this policy because margin investing, especially by a
large investor such as Mr. Hussein, can have a significant negative
effect on a company's stock and valuation. Company policies prohibiting
insiders from pledging company securities as collateral have become
increasingly common and are now recognized as best practice for good
We want you to know that on July 26th, a representative of an
investment firm in which Mr. Hussein has a margin account notified QSI
representatives that at least 800,000 shares of QSI common stock pledged
by Mr. Hussein had been sold as a result of a margin call. In an SEC
filing, Mr. Hussein confirmed today that a total of 862,047 shares
(representing 1.45 percent of the company's outstanding common stock)
were sold on July 26th. The next day, another representative
of this investment firm advised that additional shares were being
liquidated to meet the firm's margin call. Then, on July 30th,
a compliance officer from a different investment firm notified a QSI
representative that the firm was liquidating an additional 125,000
shares of QSI stock held by Mr. Hussein following a margin call on his
account. In addition to violating the company's policy prohibiting
margin accounts, Mr. Hussein also sold these shares during a "black
out period" in violation of the company's insider trading policy.
The company does not know at this time the full extent of any future
sales of Mr. Hussein's QSI stock by investment firms in which Mr.
Hussein has a margin account or the future effect of such selling on
QSI's stock price and the value of your investment. However, the Company
believes that his violations of company policy and his financial
problems that caused the forced sale of a significant amount of QSI
stock contributed to the recent decline in the company's share price and
may continue to negatively affect the stock.
We feel this information is critical for you to know as it represents
serious risks to the value of your investment. We urge you to consider
Mr. Hussein has repeatedly told the company that he refuses to
comply with the Board's current insider trading policy, which was
duly adopted over a year ago by all of the members of our Board other
than Mr. Hussein.
Mr. Hussein holds all of his remaining shares (9,333,700 shares prior
to the forced sales described here, representing 15.7 percent of the
company's outstanding shares as of June 18, 2012) in margin accounts,
which is in direct violation of the company's insider trading policy.
The Board believes that the restriction against insiders from
margining company stock addresses important risks to shareholders and
protects the value of your investment. Margin investing, especially by
a large shareholder such as Mr. Hussein, can have a significant
impact on a company's stock price and valuation. We believe
that the recent sales of a significant number of QSI shares by Mr.
Hussein resulting from margin calls demonstrates this point.
The company was not aware of Mr. Hussein's margin accounts or the
extent to which he had pledged his QSI shares until recently, because
he repeatedly failed to disclose the accounts in directors and
officers questionnaires distributed by company management to all
A number of major companies have made headlines when insiders were
forced to liquidate significant insider holdings to cover margin
calls, negatively impacting shareholder value and the company's
We believe that Mr. Hussein's actions put his own economic interest
ahead of good corporate governance, and put the value of your
investment at risk. We ask you for your support and urge you to
take action today by voting the WHITE proxy card FOR the company's
nominees to protect your investment and the future of QSI.
Please visit www.qsi2012proxy.com
for additional information about Mr. Hussein's actions and other Quality
INFORMATION REGARDING PARTICIPANTS
Information concerning the company and our directors, director nominees,
and certain executives who are or may be participants in the
solicitation of proxies in connection with the company's upcoming 2012
annual meeting of shareholders is available in the preliminary proxy
statement filed by the company with the SEC on June 25, 2012.
On June 25, 2012, the company filed a preliminary proxy statement in
connection with its 2012 annual meeting of shareholders. Prior to the
annual meeting, the company will furnish a definitive proxy statement to
its shareholders, together with a proxy card. Company shareholders are
strongly advised to read the definitive proxy statement and the
accompanying proxy card when they become available, as they will contain
important information. Shareholders will be able to obtain the
definitive proxy statement, any amendments or supplements to such proxy
statement, and other documents filed by the company with the Securities
and Exchange Commission for free at the Internet website maintained by
the Securities and Exchange Commission at www.sec.gov.
Copies of the definitive proxy statement and any amendments and
supplements to such proxy statement may be requested by contacting our
proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 toll-free or
by email at email@example.com.
SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS
Statements made in this document, the proxy statements to be filed with
the Securities and Exchange Commission, communications to shareholders,
press releases and oral statements made by our representatives that are
not historical in nature, or that state our or management's intentions,
hopes, beliefs, expectations or predictions of the future, may
constitute "forward-looking statements" within the meaning of Section
21E of the Securities and Exchange Act of 1934, as amended.
Forward-looking statements can often be identified by the use of
forward-looking words, such as "could," "should," "will," "will be,"
"will lead," "will assist," "intended," "continue," "believe," "may,"
"expect," "hope," "anticipate," "goal," "forecast," "plan," or
"estimate" or variations thereof or similar expressions. Forward-looking
statements are not guarantees of future performance.
Forward-looking statements involve risks, uncertainties and assumptions.
It is important to note that any such performance and actual results,
financial condition or business, could differ materially from those
expressed in such forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, the
risk factors discussed under "Risk Factors" in our Annual Report on Form
10-K for fiscal year ended March 31, 2012, as well as factors discussed
elsewhere in this and other reports and documents we file with the
Securities and Exchange Commission. Other unforeseen factors not
identified herein could also have such an effect. We undertake no
obligation to update or revise forward-looking statements to reflect
changed assumptions, the occurrence of unanticipated events or changes
in future operating results, financial condition or business over time
unless required by law. Interested persons are urged to review the risks
described under "Risk Factors" and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K for fiscal year ended March 31, 2012, as well as in
our other public disclosures and filings with the Securities and
Steven Plochocki, CEO
Quality Systems, Inc.
Susan J. Lewis
Tom Johnson or Mike Pascale
Source: Quality Systems, Inc.
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