Category Archives: Settlement

Timing Is Everything

(1) Given that the PSLRA has been in effect since 1995, federal courts of appeals have been spending a surprising amount of time lately addressing writs of mandamus on how to interpret the statute’s lead plaintiff provisions. Just last month, a Ninth Circuit panel held that a district court cannot reject the lead plaintiff’s proposed lead counsel and substitute lead counsel of the court’s own choosing. In In re Bard Associates, Inc., 2009 WL 4350780, (10th Cir. Dec. 2, 2009), the Tenth Circuit was asked to consider whether an investment advisor who applied to act as lead plaintiff, but did not obtain assignments of its clients’ claims until after its motion was filed, made a valid application. The panel found that the district court did not abuse its discretion when it rejected the investment advisor’s application on the grounds that the investment advisor had failed to establish its standing to sue as of the lead plaintiff application deadline.

(2) Settling a securities class action for $40 million is not that unusual. Settling a securities class action for $40 million after obtaining the dismissal of the case (and before any appellate ruling) is quite unusual. The D&O Diary and The American Lawyer have full coverage of Dell’s interesting settlement announced last week. It certainly seems hard to argue with lead counsel’s conclusion that it was “a very, very good result for the class . . . [p]articularly given the procedural posture of the case.”

Leave a comment

Filed under Appellate Monitor, Lead Plaintiff/Lead Counsel, Settlement

Marsh & McLennan Settles

Marsh & McLennan Companies, Inc. (NYSE: MMC), a global professional services firm, has announced the preliminary settlement of the securities class action pending against the company in the S.D.N.Y. The case was originally filed in 2004 and is based on alleged false financial statements related to an insurance brokerage industry practice of charging and collecting “contingent commissions.”

The settlement is for $400 million, with $205 million to be covered by insurance. According to a press release issued by one of the lead plaintiffs, the average recovery will be $.77 a share. Bloomberg has an article on the settlement and Reuters follows-up with a profile of the Ohio Attorney General and his involvement in the case.

The 10b-5 Daily has previously posted about the Marsh case in relation to the court’s decisions on collective scienter and confidential witnesses.

Leave a comment

Filed under Settlement

You’ll Get Nothing And Like It

When it comes to sharp talk from the bench, Judge James Rosenbaum and the UnitedHealth securities class action is the gift that keeps on giving. The court’s latest decision – In re UnitedHealth Group Inc. PSLRA Litig., 2009 WL 2868399 (D. Minn. Sept. 4, 2009) – addresses whether counsel for the attorneys’ fees objectors should be paid for their efforts. The court, as part of approving the settlement of the case, reduced the requested attorneys’ fees from $110 million to $65 million. However, Judge Rosenbaum was upset (to say the least) at the idea that the objectors should receive the credit.

The court noted that the objectors’ filing was late, short, and “presented no facts, offered no law, and raised no argument upon which the Court relied in its deliberation or ruling.” The court therefore held that the objectors’ counsel, which it described as “remoras” (i.e., suckerfish), were “entitled to an award equal to their contribution . . . nothing.”

Holding: Motion for award of fees denied.

Quote of note: “If the Court may be permitted an egregious paraphrase of Winston S. Churchill: Seldom in the field of securities litigation was so little owed by so many to so few.”

Leave a comment

Filed under Settlement

Marvell Technology Settles

Marvell Technology Group Ltd. (NASDAQ: MRVL), a Santa Clara-based developer of of storage, communications and consumer silicon solutions, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of California. The case was filed in 2007 and relates to Marvell’s historic stock option granting practices.
The settlement is for $72 million. According to the helpful Securities Class Action Services tracking chart, it is the fourth-largest settlement of an options backdating class action (the top three, in order, are UnitedHealth Group, Brocade, and Mercury Interactive).

Leave a comment

Filed under Settlement

Beazer Homes Settles

Beazer Homes USA, Inc. (NYSE: BZH), a Georgia-based homebuilder, has announced the preliminary settlement of the securities class action pending against the company in the N.D. Ga. The case, originally filed in March 2007, was one of the first subprime cases and stems from disclosures related to the company’s loan origination practices.

The settlement is for $30.5 million and is being funded by the company’s insurers. The D&O Diary has a comprehensive post on the settlement, including links to many of the key court documents.

Leave a comment

Filed under Settlement

Ernst & Young Settles HealthSouth-Related Claims

Ernst & Young LLP (“E&Y”) has entered into a stipulation of settlement in the HealthSouth securities class action in the N.D. of Ala. The case, originally filed in June 2003, stems from allegations that the defendants materially misrepresented the company’s earnings by failing to disclose the impact of certain changes in Medicare reimbursement on the company’s profits.

The E&Y settlement is for $109 million. HealthSouth settled the claims against the company for $445 million back in 2006. The American Lawyer reports that the E&Y settlement comes just before a court hearing on class certification. E&Y remains a defendant in a separate class action brought by HealthSouth’s bondholders.

Leave a comment

Filed under Settlement

General Re Settles AIG-Related Claims

General Re Corp., a subsidiary of Berkshire Hathaway Inc. and a global reinsurance company, has agreed to a tentative settlement in the AIG securities class action pending in the S.D.N.Y. The case was originally filed in October 2004. The claims against General Re relate to its alleged participation in a fraudulent $500 million reinsurance transaction with AIG that allowed AIG to improperly inflate its loss reserves.

The General Re settlement is for $72 million. Last October, PwC settled the claims against it in the case for $97.5 million. CFO.com has an article on the settlements.

Leave a comment

Filed under Settlement

Accredo Health Settles

Accredo Health, Inc., a wholly-owned subsidiary of Medco Health Solutions, Inc. (NYSE: MHS), has reached a preliminary settlement of the securities class action pending against it in the W.D. of Tennessee. The case, originally filed in April 2003, stems from allegations that loss reserves relating to a business Accredo acquired were materially understated. The settlement is for $33 million.

Leave a comment

Filed under Settlement

Bridgestone Settles

Bridgestone Corp. (PINKSHEETS: BRDCF), a Japanese tire manufacturer, has reached a settlement in the securities class action pending against it in the M.D. of Tennessee. The case, originally filed in January 2001, stems from allegations that Bridgestone disseminated false and misleading statements to conceal the existence of defects in a model of tires manufactured by the company. The court granted preliminary approval of the settlement on September 30, 2008.

The settlement is for $30 million. The 10b-5 Daily has previously posted about collective scienter issues in the case.

Leave a comment

Filed under Settlement

General Motors Settles

General Motors, Corp. (NYSE: GM), a Michigan-based automaker, has announced the preliminary settlement of the securities class action pending against the company in the E.D. of Michigan. The case, originally filed in September 2005, stems from allegations that General Motors issued a series of false and misleading statements regarding the company’s financial status.

The settlement is for $303 million, of which Deloitte & Touche, General Motor’s outside auditor, will pay $26 million. Reuters has an article on the settlement and a press release issued by plaintiffs’ counsel can be found here.

Leave a comment

Filed under Settlement