The Singing Machine Co. (AMEX: SMD), a Florida-based maker of consumer-oriented karaoke machines, has announced the preliminary settlement of the securities class action (and a related derivative suit) pending against the company in the S.D. of Fla. The suit, originally filed in July 2003, is based on alleged misrepresentations related to Singing Machine’s restatement of its 2001 and 2002 financials.
The settlement is for a combination of 400,000 shares of common stock and a cash payment of $1.275 million ($800,000 from the company and $475,000 from its former auditor). Singing Machine also is obligated to make certain corporate governance changes, including expanding its board to six members with independent directors comprising at least 2/3 of the total board seats.