There were two significant settlements this week.
(1) Comverse Technology, Inc. (Pink Sheets: CMVT) has entered into a preliminary settlement of the securities class action pending against the company in the E.D. of New York. The case was originally filed in 2006 and is based on alleged options backdating. The 10b-5 Daily has previously posted about the court’s lead plaintiff decision.
The settlement is for $225 million, making it the second largest options backdating settlement (behind UnitedHealth). The American Lawyer reports that Comverse will pay $165 million, to be financed by the sale of auction rate securities back to UBS, while the company’s former CEO will pay $60 million.
(2) Flowserve Corporation (NYSE: FLS) has announced the preliminary settlement of the securities class action pending against the company in the N.D. of Texas. The case was filed in 2003 and alleges financial misstatements.
The settlement is for $55 million, with the company contributing $13.5 million and its insurance carriers contributing $40 million (the balance of $1.5 million will be paid by “another defendant”). Although the district court had denied class certification on loss causation grounds, that decision was overturned by the Fifth Circuit earlier this year.