Category Archives: Settlement

McKesson Corp. (NYSE: MCK), a San Francisco health services company, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of Cal. The case was based on the discovery of accounting improprieties at HBO & Co., an Atlanta-based health-care software business that had been acquired by McKesson in January 1999. The settlement is for $960 million. According to Securities Litigation Watch, this will be the fifth largest settlement of a securities class action ever.

The Recorder has an article (via law.com – free regist. req’d) on the settlement. The McKesson securities litigation has a long history, with a number of interesting court decisions. A couple of years ago, The 10b-5 Daily posted about McKesson’s attempt to file a counterclaim against former HBOC shareholders for unjust enrichment.

PNC Financial Services Group (NYSE: PNC), a Pittsburgh-based diversified financial services organization, has announced the preliminary settlement of the securities class action pending against the company in the W.D. of Pa. The case arises out of transactions between PNC and AIG Financial Products in 2001 that allegedly helped PNC hide losses through the transfer of underperforming loans. The settlement is for $30 million, to be paid by PNC’s insurers. AIG Financial Products will contribute an additional $4 million to settle any potential claims brought against it by the plaintiffs.

Crossroads Systems, Inc. (Nasdaq: CRDS), an Austin-based provider of storage networking solutions, has announced the preliminary settlement of the securities class action pending against the company in the W.D. of Tex. The suit was originally filed in 2001 and alleges that the company made misstatements about the capabilities of its router products and financial results. In a decision earlier this year, the U.S. Court of Appeals for the Fifth Circuit partially reversed a grant of summary judgment for the defendants. The settlement is for $4.35 million, with $3.35 million to be paid by Crossroads’ insurance carriers.

Elan Corp. (NYSE: ELN), an Ireland-based pharmaceutical company, has announced the preliminary settlement of the securities class action pending against the company in the S.D.N.Y. The case, originally filed in 2002, alleges that Elan engaged in accounting violations. The settlement is for $75 million, with $35 million to be paid by the company and $40 million by its insurance carrier.

Addition: An interesting sidenote – Elan is the parent company of Dura Pharmaceuticals, the defendant in the loss causation case currently before the U.S. Supreme Court.

The AT&T securities class action went to trial, but there will be no jury verdict. AT&T (NYSE: T), a N.J.-based telecommunications company, announced today that after three weeks of trial proceedings it is settling the case for $100 million, or about 4% of the damages being sought by the plaintiffs. The company also said that “it intends to seek reimbursement from its insurers for the amounts to be paid.”

The 10b-5 Daily has been closely following the interesting events surrounding the Halliburton settlement. In the October 2004 edition of the SCAS Alert, Bruce Carton has a good summary of the court’s recent decision to reject the proposed $6 million settlement in that case.

The U.S. and Belgian affiliates of KPMG, Int’l have agreed to a preliminary settlement of the claims brought against them as part of the Lernout & Hauspie securities class action pending in the D. of Mass. (The 10b-5 Daily has previously posted about discovery issues in the case.) KPMG acted as the company’s auditor.

The settlement is for $115 million. The New York Times reports the settlement “would be the second-largest ever paid by KPMG, after the $125 million resolution reached last year in connection with its role as auditor of Rite-Aid.”

After a year-long battle among the lead plaintiffs in the Halliburton securities class action (and the recusal of the original judge), the N.D. of Tex. has rejected a proposed $6 million settlement in the case. The court found that it was “not satisfied that the settlement proposed is fair, reasonable and adequate” and expressed concerns “about the manner in which settlement was reached.” The New York Times has an article on the decision.

Quote of note: “The judge noted in her opinion that the $6 million payment proposed by the settlement would have been reduced by administrative costs of $1.5 million, lawyers’ fees of $1.5 million and expenses of $117,239. Therefore, more than 800,000 potential claimants would share a settlement of less than $3 million. If all the potential class members submitted claims, the court calculated that an investor with 100 shares would recover about 62 cents.”

As reported in The 10b-5 Daily last year, there is a dispute among the lead plaintiffs in the Halliburton securities class action over a proposed $6 million settlement. Scott + Scott (which represents one of the four lead plaintiffs) refused to sign onto the settlement and continues to challenge the appropriateness of the proposed payment. On June 7, 2004, Judge Godbey of the N.D. of Tex. gave his preliminary approval of the settlement. Since then, however, there have been two notable developments.

First, Scott + Scott moved the court to file a new class action complaint against Halliburton. The proposed complaint included allegations from anonymous former employees and got widespread publicity (in a number of newspapers under the erroneous headline “Ex-Employees Sue Halliburton For Fraud”). Second, Judge Godbey discovered this week that he may have sold Halliburton stock during the class period and recused himself from the case. CBSMarketwatch.com has thorough coverage of the story. Scott+Scott has stated that it will renew its motions before the new judge.