Tut Systems, Inc. (Nasdaq: TUTS) has announced the preliminary settlement of the securities class action pending against the company in the N.D. of California (the company is also settling a related derivative case brought in California state court). According to an article on the settlement in the Oakland Tribune, Plaintiffs had alleged that the company’s financial results for the second and third quarters of 2000 “were false and misleading because the company failed to report a major recall of one of its products in the summer of 2000 that resulted in improperly recognized revenues on sales of defective products that were returned during the recall.”
The settlement of the securities class action, which is still subject to court approval, is for $10 million. The settlement of the derivative case involves Tut’s adoption of certain corporate governance measures and the payment of plaintiff’s legal fees and expenses. Both payments will be made by Tut’s insurance carrier.