Category Archives: Settlement

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.

As reported in The 10b-5 Daily, last December SkillSoft PLC (Nasdaq: SKIL) settled a securities class action brought against the company in the N.D. of Cal. for $32 million. But that still left another, more recent securities class action based on alleged misrepresentations relating to a 2002 financial restatement pending in the D. of N.H.

Yesterday, the New Hampshire-based business and IT training software maker announced the preliminary settlement of the D. of N.H. case for $30.5 million. SkillSoft stated that it is in discussions with its insurers over their potential contribution to the settlement amount.

Rayovac Corp. (NYSE: ROV), a Madison-based consumer products company, has announced the preliminary settlement of the securities class action pending against the company in the W.D. of Wisconsin. The suit, originally filed in May 2002, alleges that the company and certain of its officers made misleading statements regarding the demand for the company’s products and the company’s future prospects in connection with a secondary offering. The settlement is for $4 million, to be “principally funded” by Rayovac’s insurance carriers.

Irvine Sensors Corp. (Nasdaq: IRSN), a Costa Mesa, Ca.-based microelectronics developer, has announced the receipt of preliminary court approval for the settlement of the securities class action pending against the company in the C.D. of Cal. The suit, originally filed in February 2002, alleges that the company made false and misleading statements concerning the prospects of its former Silicon Film subsidiary. The settlement is for $3.5 million, to be paid by the company’s insurance carrier.

Global Crossing Ltd. (Nasdaq: GLBC), a fiber-optic network operator that emerged from bankruptcy a few months ago, received preliminary court approval on Friday for a settlement of the securities class action pending against the company in the S.D.N.Y. (as well as a related ERISA action). The case alleges that Global Crossing and its executives falsely inflated the company’s revenue by entering into sham swap transactions.

According to a Bloomberg report, the settlement is for $325 million ($245 million for the securities case and $85 million for the ERISA case). Although the company’s insurers are paying the bulk of the securities class action settlement, former-CEO Gary Winnick ($30 million) and Simpson, Thacher & Bartlett ($19.5 million) are also making significant contributions. Simpson Thacher was not even a named defendant, but has been accused of engaging in a “flawed and incomplete” investigation on behalf of the board committee that examined the swap transactions.

The settlement is not global – the securities class action will continue against Global Crossing’s accountants and underwriters, including Arthur Andersen, Salomon Smith Barney, J.P. Morgan, and Goldman Sachs.

Addition: The New York Times had a fairly comprehensive article on the settlement in Saturday’s edition.

Apropos Technology, Inc. (Nasdaq: APRS), an Illinois-based provider of interaction management solutions, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of Ill. The suit, originally filed in November 2001, alleges Apropos made misstatements in the registration statement and prospectus for its initial public offering. The settlement is for $4.5 million (to be paid by Apropos’ insurer) and is subject to final court approval.

Alliterative coincidence? Here are today’s announced settlements:

InterCept, Inc. (Nasdaq: ICPT), an Atlanta-based technology provider for financial institutions and merchants, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of Ga. The case, originally filed in 2003, alleges that InterCept made misleading statements concerning the significance of the adult entertainment portion of the company’s merchant services business and the impact of new Visa regulations. The settlement, which is subject to court approval, is for $5.3 million. InterCept will pay $3.95 million and its insurance carrier will pay $1.35 million.

InfoSpace, Inc. (Nasdaq: INSP), a Bellevue-based Internet services company, has announced the preliminary settlement of the securities class action pending against the company in the W.D. of Wash. The case, originally filed in 2001, alleges that InfoSpace made misleading statements concerning its business and prospects. The settlement, which has received preliminary approval from the court but is still subject to final approval, is for $34.3 million. The entire amount will be paid by the company’s insurance carriers.

Gemstar-TV Guide Int., Inc. (Nasdaq: GMST), a media technology company based in Los Angeles, has announced the preliminary settlement of the securities class action pending against the company in the C.D. of Cal. The suit is based on alleged misrepresentations made in connection with Gemstar’s accounting for certain transactions that were subsequently restated between November 2002 and March 2003. The settlement does not include the individual defendants in the class action or the related derivative cases that have been brought against the company.

The settlement, which is subject to court approval, is for $67.5 million, which will be paid in cash and stock. Gemstar will pay an aggregate of $42.5 million in cash to the class in a combination of direct payments and, interestingly, payments which may be made through the SEC. In addition, the company will issue 4,105,090 shares of common stock which was valued at $6.09 per share on the date the agreement was reached, or $25 million in the aggregate (this stock issuance is subject to possible adjustments related to share price). Gemstar will also assign to the plaintiffs certain of its claims against its former auditors, KPMG.

Securities Litigation Watch has an article from the February 2004 SCAS Alert that takes a look at “the good, the bad and the ugly” settlements from last year. Bruce Carton notes that large settlements, in terms of overall dollars, do not necessarily translate into large recoveries for the investors.

NCI Building Systems, Inc. (NYSE: NCI), a Houston-based manufacturer of metal products for the nonresidential building industry, has announced the preliminary settlement of the securities class action pending against the company in the S.D. of Tex. The case was originally filed in April 2001 and is based on alleged misrepresentations related to the company’s restatement of its 3Q 1999 to 1Q 2001 financial results. The settlement is for $7 million.