UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF GEORGIA

xRUDOLF SKUBELLA , Individually : Civil Action No.and On Behalf Of All Others SimilarlySituated, : COMPLAINT FOR VIOLATION OF

• THE FEDERAL SECURITIES LAWSPlaintiff(s) ,

vs.

CHECKFREE CORPORATION,PETER J. KIGHT,DAVID MANGUM,

Defendants . . DEMAND FOR JURY TRIAL

x

NATURE OF THE CASE

1 . This is a securities class action on behalf of all purchasers of the publicly-

traded securities of CheckFree Corporation ("CheckFree" or the "Company") betwee n

April 4, 2006 and August 1, 2006 (the "Class Period"), against CheckFree and certai n

of its officers and directors for violations of the Securities Exchange Act of 1934 (th e

"1934 Act") .

2. CheckFree is in the business of providing financial electronic commerce

services and products . As part of its business, CheckFree operates .electronic bill

paying websites, in some cases as a contractor for banks whose names are on the sites .

This portion of CheckFree's business is referred to as "Electronic Commerce ." The

portion of Electronic Commerce principally limited to remittance provisions i s

referred to as "Payment Services ." During the Class Period, defendants made positive

but false statements about CheckFree's Electronic Commerce and Payment Service s

business while concealing material adverse information about the true nature of that

business .

3 . On April 4, 2006, financial analyst Andrew Jeffrey of SunTrust Robinso n

Humphrey published a report raising the rating on CheckFree from "Neutral" to

"Buy." This change was based in part on a projection of "25% annual transactio n

growth for the foreseeable future ." The upgrade and projections included in this

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report were based upon false and misleading estimates provided by defendants to

SunTrust Robinson Humphrey . The report itself refers to "our recent discussions with

the company," and the report discloses that SunTrust Robinson Humphrey was both a

market maker in CheckFree stock and received compensation from CheckFree within

the previous twelve months . As a result of this false and misleading report, the pric e

of CheckFree stock increased 8% in a single day .

4. On April' 25, 2006, defendants held a conference call with financial

analysts . On that call, defendants stated that they expected the Company's Electronic

Commerce to grow 5-8% and that the Company's Payment Services would experienc e

growth in the quarter ending June 30, 2006 . In fact, at the time these statements were

made, CheckFree had already experienced extraordinarily low transaction volume in

April 2006. As a result of this poor showing in April, CheckFree's Electronic

Commerce business would not and could not grow 5-8%, while the Payment Services

would not grow at all in the quarter ending June 30, 2006 .

5 . Defendants' false misleading statements concerning the growth of

CheckFree' s business artificially inflated the price of the Company's stock during the

Class Period. This stock price was further inflated by defendants ' decision to have the

Company buy back 550,000 shares of CheckFree's stock during the Class Period fo r

$26 million dollars .

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6. On August 1, 2006, defendants held another conference call with

financial analysts and reported the Company's financial results for the quarter ending

June 30, 2006. Rather than growing as defendants has previously stated, CheckFree' s

Payment Services business .declined 2% in the quarter. The Company's Electronic

Commerce business grew only 3%, not the 5-8% promised . After the market learned

of these disappointing results, shares of CheckFree plunged $5 .93 - 13% - the next

day on volume of 17 .3 million shares, the highest daily volume in the more than 1 0

years that the Company had been publicly-traded .

JURISDICTION AND VENUE

7. Jurisdiction is conferred by §27 of the 1934 Act . The claims asserted

herein arise under § § 10(b) and 20(a) of the 1934 Act and Rule I Ob-5 .

8 . Venue is proper in this District pursuant to §27 of the 1934 Act . Many of

the false and misleading statements were made in or issued from this District and the

Company in headquartered and conducts substantial business in this District .

THE PARTIES

9 . Plaintiff purchased CheckFree publicly-traded securities as described in

the attached certification and was damaged thereby .

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10. Defendant CheckFree is a corporation headquartered in Norcross,

Georgia, that provides financial electronic commerce services and products, including

the operation of bill paying websites .

11 . Defendant Peter J. Kight ("Kight") was Chairman of the Board and Chief

Executive Officer of CheckFree during the Class Period .

12 . Defendant David Mangum ("Mangum") was Executive Vice President

and Chief Financial Officer of CheckFree during the Class Period .

SCIENTER, FRAUDULENT SCHEME AND COURSE OF BUSINES S

13 . CheckFree's top officers and directors, including the Individua l

Defendants, knew that the Company's Electronic Commerce and Payment Service s

experienced extraordinarily low transaction volumes in April of 2006 . Indeed,

Electronic Commerce accounted for $169 million of the Company's revenue in the

quarter ending March 31, 2006, or 74% of revenues . As the top officers of

CheckFree, the Individual Defendants were obviously aware of a shortfall in the

Company's primary business, especially given the electronic and thus instantaneous

nature of the Electronic Commerce and Payment Services transactions . CheckFree

and the Individual Defendants are therefore liable for making false statements ,

including those by its executive officers . Defendants' fraudulent scheme and cours e

of business operated as a fraud or deceit on purchasers of CheckFree stock in that : (i)

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temporarily deceived the investing public regarding CheckFree's prospects and

business; (ii) artificially inflated the prices of CheckFree's publicly-traded securities ;

and (iii) caused plaintiff and other .members of the Class to purchase CheckFree

publicly-traded securities at inflated prices .

FALSE AND MISLEADING STATEMENTS DURING THE CLASSPERIOD

14. On April 4, 2006, financial analyst Andrew Jeffrey of SunTrust Robinso n

Humphrey published a report raising the rating on CheckFree from "Neutral" to

"Buy." This change was based in part on a projection of "25% annual transaction

growth for the foreseeable future ." The upgrade and projections included in this

report were based upon false and misleading estimates provided by defendants to

SunTrust Robinson Humphrey . The report itself refers to "our recent discussions with

the company," and the report discloses that SunTrust Robinson Humphrey was both a

market maker in CheckFree stock and received compensation from CheckFree within

the previous twelve months . As a result of this false and misleading report, the price

of CheckFree stock increased 8% in a single day.

15 . On April 25, 2006 , defendants issued a press release repo rting the

Company's financial results for the quarter ending March 2006 . That release also

stated:

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"Based on strong year-to-date results , we have raised our expectationsfor the Company 's consolidated performance ," said CheckFree ChiefFinancial Officer David Mangum "for the fourth quarter of fiscal year2006, we expect revenue in the range of $226 million to $231 milliondollars, gap ea rning per share in the range of $ .30 to $.33 . .

16 . Defendants also held a conference with financial analysts on April 25,

2006. During that call, defendant Mangum reiterated the forecast included in the

Company's press release : "Turning now the fourth quarter expectations : we anticipate

consolidated revenue in the range of $226 million to $231 million and earnings per

share to $ 30 to $33 on a GAAP basis . In Electronic Commerce we expect sequential

transaction growth of 5 to 8%. . . . In Payment Services, we expect to return to more

modest transaction growth . . . we are increasing our full financial expectations, based

on our strong overall performance year-to-date full year earnings per. share

expectations are now a $1 .34 to $1 .37 on a GAAP basis ."

17. Defendants' statements were false and misleading at the time they were

made because CheckFree had already processed far fewer transactions in April 200 6

than expected . As a result, CheckFree's Electronic Commerce and Payment Service s

businesses would not grow in the quarter as defendants represented and the Company

would not achieve the promised revenues .

18 . On April 26, 2006, Andrew W. Jeffrey, a financial analyst with Sun-Trus t

Robinson Humphrey, issued an analyst report which stated in part : "In summary,

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CheckFree's recent results continue an impressive pattern of exceeding investor

expectations even through tumultuous business change . . . we anticipate that

CheckFree will continue its recent pattern of keeping estimates and guiding the street

higher ."

19. On August 1, 2006, defendants issued a press release containing

CheckFree's financial results for the quarter ending June 2006. This press release

reported $224.9 million in revenue for the quarter . The press release further reported

that the Company had purchased 550,000 shares of CheckFree common stock durin g

the quarter for approximately $26 million .

20. Defendants held a conference call with financial analysts on August 1 ,

2006. On that call, defendant Kight stated :

"For the fourth quarter, however, our Electronic Commerce divisionreported lighter consumer transaction growth, and the division fell shortof expectations as you are now aware . We processed 302.2 milliontransactions, reporting 3% sequential quarterly growth . . . For paymentsservices, we processed 85 million for this quarter, and that is a 2%sequential quarterly decline . . . so we will continue to research thecauses of the Q4 transactions softness in more depth . It appears acombination of a reoccurring trend where we have seen previously wherethere fewer billing cycles in April, and therefore, consumers make fewermake payments in the month . . . . The April drop in paymenttransactions is a calendar-based transaction issue . It is not a bank basedphenomena."

21 . As a result of the Company 's disappointing performance, CheckFree' s

stock price plummeted from $43 . 13 on August 1, 2006 to a closing price $37 .20 the

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next day on volume of 17.3 million shares, the highest daily volume in the more than

10 years that the Company had been publicly-traded .

22 . Investment analysts, like investors, were shocked by defendants '

disclosures . Canon Can and John Wharton , financial analysts for CIBC World

Markets, issued an analyst report on August 2, 2006 concerning CheckFree with the

headline "CheckFree Corp . surprises with weaker pay volumes ." Tony Wilbe, a

financial analyst with Citigroup, published an analyst report the same day that stated

"We find the weak transaction growth problematic as it raises a fundamental question

regarding the near term growth of the EBP [Electronic Bill Paying] industry."

LOSS CAUSATION/ECONOMIC LOS S

23 . During the Class Period, as detailed herein, defendants engaged in a

scheme to deceive the market and a course of conduct that artificially inflated

CheckFree's stock price and operated as a fraud or deceit on Class Period purchasers

of CheckFree stock by misrepresenting the Company's business . Later, when

defendants' prior misrepresentations and fraudulent conduct were disclosed an d

became apparent to the market, CheckFree stock price fell precipitously, as the prio r

artificial inflation came out of the stock price . As a result of their purchases o f

CheckFree stock during the Class Period, plaintiff and other members of the Clas s

suffered economic loss, i .e ., damages, under the federal securities laws .

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NO SAFE HARBOR

24. CheckFree's verbal "Safe Harbor" warnings accompanying its ora l

forward-looking statements ("FLS") issued during the Class Period were ineffective to

shield those statements from liability for several reasons . First of all, CheckFree, in

its Class Period conference calls and other meetings with analysts and investors, neve r

warned that any "particular" statement was an FLS, stating only that presentation s

"may" or "will" contain FLS . Second, the cautionary statements in CheckFree's SE C

filings that defendants' attempted to adopt in their conference calls were not

"meaningful ;" rather, they were boilerplate. Even though the economic, industry and

company-specific factors affecting CheckFree's business and its performance varie d

markedly for quarter-to-quarter, the purported cautionary statements contained in th e

10-Q filings with the SEC that defendants attempted to incorporate by reference int o

their conference calls and press releases themselves incorporated by reference

boilerplate risk disclosures from CheckFree's Form 10-K for the year ending June 30 ,

2005, over ten months before the beginning of the Class Period . Thus, the statutory

safe harbor provided for FLS does not apply to the false FLS pleaded.

25 . The defendants are also liable for the false FLS pleaded because, at the

time each FLS was made, the speaker knew the FLS was false and the FLS wa s

authorized and/or approved by an executive officer of CheckFree who knew that th e

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FLS was false. None of the historic or present tense statements made by defendants

were assumptions underlying or relating to any plan, projection or statement of futur e

economic performance, as they were not stated to be such assumptions underlying or

relating to any projection or statement of future economic performance when made

nor were any of the projections or forecasts made by defendants expressly related to o r

stated to be dependent on those historic or present tense statements when made .

APPLICABILITY OF PRESUMPTION OF RELIANCE :FRAUD ON THE MARKE T

26 . Plaintiff will rely upon the presumption of reliance established by th e

fraud-on-the-market doctrine in that, among other things :

(a) Defendants made public misrepresentations or failed to disclose

material facts during the Class Period ;

(b) The omissions and misrepresentations were material ;

(c) The Company's securities traded in efficient markets ;

(d) The misrepresentations alleged would tend to induce a reasonabl e

investor to misjudge the value of the Company 's securities; and

(e) Plaintiff and other members of the class purchased CheckFree

publicly traded securities between the time defendants misrepresented or failed to

disclose material facts and the time the true facts were disclosed, without knowledg e

of the misrepresented or omitted facts .

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27. At all relevant times, the markets for CheckFree publicly traded secu rities

were efficient for the following reasons, among others :

(a) As a regulated issuer, CheckFree filed periodic public reports with

the Securities and Exchange Commission (the "SEC") and the New York Stock

Exchange ;

(b) CheckFree regularly communicated with public investors via

established market communication mechanisms, including through regular

disseminations of press releases on the major news wire services and through other

wide-ranging public disclosures, such as communications with the financial press ,

securities analysts and other similar reporting services ; and CheckFree's publicly

traded securities were actively traded in an efficient market, namely NASDAQ, under

the symbol CKFR .

COUNT I

For Violation of §10(b) of the 1934 Actand Rule 10b-5 Against All Defendant s

28 . Plaintiff incorporates ¶¶l - 27 by reference .

29 . During the Class Period, defendants disseminated or approved the false

statements specified above, which they knew or recklessly disregarded were

misleading in that they contained misrepresentations and failed to disclose material

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facts necessary in order to make the statements made, in light of the circumstances

under which they were made, not misleading .

30 . Defendants violated § 10(b) of the 1934 Act and Rule I Ob-5 in that they :

(a) Employed devices, schemes, and artifices to defraud ,

(b) Made untrue statements of material facts or omitted to state

material facts necessary in order to make the statements made, in light of th e

circumstances under which they were made, not misleading; or

(c) Engaged in acts, practices, and a course of business that operated

as a fraud or deceit upon plaintiff and others similarly situated in connection with their

purchases of CheckFree publicly-traded securities during the Class Period .

3.1 . Plaintiff and the Class have suffered damages in that , in reliance on the

integrity of the market, they paid artificially inflated prices for CheckFree publicly-

traded securities . Plaintiff and the Class would not have purchased CheckFree

publicly-traded securities at the prices they paid, or at all, if they had been aware tha t

the market prices had been artificially and falsely inflated by defendants' misleadin g

statements .

32. As a direct and proximate result of these defendants' wrongful conduct,

plaintiff and the other members of the Class suffered damages in connection with their

purchases of CheckFree publicly-traded securities during the Class Period .

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COUNT II

For Violation of §20(a) of the 1934 ActAgainst Individual Defendants

33. Plaintiff incorporates ¶J[1- 32 by reference.

34. The Individual Defendants acted as controlling persons of CheckFre e

within the meaning of §20 of the 1934 Act. By virtue of their positions and their

power to control public statements about CheckFree, the Individual Defendants had

the power and ability to control the actions of CheckFree and its employees .

CheckFree controlled the Individual Defendants and its other officers and employees .

By reason of such conduct, defendants are liable pursuant to §20(a) of the 1934 Act .

CLASS ACTION ALLEGATIONS

35. Plaintiff brings this action as a class action pursuant to Rule 23 of the

Federal Rules of Civil Procedure on behalf of all persons who purchased CheckFree

publicly-traded securities (the "Class") during the Class Period . Excluded from. the

Class are defendants , directors and officers of CheckFree and their families and

affiliates .

36. The members of the Class are so numerous that joinder of all members is

impracticable . The disposition of their claims in a class action will provide substantial

benefits to the parties and the Court . CheckFree had more than 90 million shares o f

stock outstanding, owned by thous ands of persons .

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37 . There is a well-defined community of interest in the questions of law and

fact involved in this case . Questions of law and fact common to the members of the

Class which predominate over questions which may affect individual Class members

include:

(a) Whether the 1934 Act was violated by defendants ;

(b) Whether defendants omitted and/or misrepresented material facts ;

(c) Whether defendants' statements omitted material facts necessary in

order to make the statements made, in light of the circumstances under which they

were made, not misleading;

(d) Whether defendants knew or recklessly disregarded that their

statements were false and misleading ;

(e) Whether the price of CheckFree publicly-traded securities was

artificially inflated; and

(f) The extent of damage sustained by Class members and the

appropriate measure of damages .

38 . Plaintiff's claims are typical of those of the Class because plaintiff and

the Class sustained damages from defendants' wrongful conduct .

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39. Plaintiff will adequately protect the interests of the Class and has retained

counsel who are experienced in class action securities litigation . Plaintiff has no

interests which conflict with those of the Class.

40 . A class action is superior to other available methods for the fair and

efficient adjudication of this controversy.

PRAYER FOR RELIEF

WHEREFORE, plaintiff-prays for judgment as follows :

A. Declaring this action to be a proper class action pursuant to Rule 23 ;

B . Awarding plaintiff and the members of the Class damages and interest ;

C . , Awarding plaintiff's reasonable costs, including attorneys' Frees ; and

D. Awarding such equitable/injunctive or other relief as the Court may deem

just and proper .

JURY DEMAND

Plaintiff demands a trial by jury .

Dated : April 10, 2007 Respectfully submitted ,

CHITWOOD HARLEY HARNES LLP

Robert W. KillorinGeorgia Bar No . : 417775Katie KingGeorgia Bar No . : 142566

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2300 Promenade II1230 Peachtree Street, N .E.Atlanta, GA 30309Phone: (404) 873-3900Fax: (404) 876-4476RKillorin@chitwoodlaw .comKKing@chitwoodlaw.com

SCOTT + SCOTT LLPArthur L. Shingler III600 B Street, Suite 1500San Diego, CA 92101Tel : 619/233-4565Fax: 619/233-0508

SCOTT + SCOTT LLPDavid R. Scott108 Norwich AvenueP.O. Box 192Colchester, CT 06415Tel : 860/537-5537Fax: 860/537-4432

Counsel for Plaintiff

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