Category Archives: Settlement

Royal Dutch Shell p.l.c. (NYSE: RDS/A) has taken another step toward resolving the investor claims related to the company’s 2004 recategorization of certain proved oil and gas reserves. After reaching a proposed settlement with non-U.S. shareholders last year for approximately $350 million, the company announced today that it has entered into an agreement in principle with U.S. shareholders. The U.S. class would receive a base settlement amount of approximately $83 million (based on proportions previously established in the proposed non-U.S. settlement), with an additional payment of $35 million to be divided proportionally between the U.S. class and the participants in the proposed non-U.S. settlement.

R&G Financial Corp. (PINKSHEETS: RGFC), a financial holding company based in San Juan, Puerto Rico that provides banking, mortgage banking, and insurance services, has announced the preliminary settlement of the securities class action (and a related derivative suit) pending against the company in the S.D. of New York. The case, originally filed in April 2005, stems from allegations that R&G Financial failed to disclose and misrepresented adverse facts in its financial statements, lacked adequate internal controls, and engaged in financial accounting practices that caused its net income and financial results to be materially overstated. The settlement is for $39 million, with R&G Financial contributing approximately $29 million, and the company’s insurers and certain individual defendants contributing approximately $11 million.

Transkaryotic Therapies, Inc. (“TKT”), a Massachusetts-based biopharmaceutical company acquired by Shire plc in 2005, has announced the preliminary settlement of the securities class action pending against the company in the D. of Mass. (The settlement was agreed to in Oct. 2007.)

The case, originally filed in January 2003, alleges that executives at TKT failed to disclose material adverse information regarding the prospects for FDA approval of Replagal, TKT’s drug for the treatment of Farbry disease. The settlement is for $50 million, with Shire contributing $27 million and the remaining $23 million paid by its insurers.

KLA-Tencor Corp. (NASDAQ: KLAC), a California-based provider of process controls and yield management solutions for the semiconductor and microelectronics industries, has announced the preliminary settlement of the securities class action pending against the company in the N.D. of Cal. The case, originally filed in June 2006, stems from allegations that KLA-Tencor failed to properly account for the stock options it granted its employees.

The settlement is for $65 million. For coverage of the earlier options-related settlement between KLA-Tencor and the SEC, see this New York Times article.

Deloitte & Touche LLP, an auditing firm, has announced the preliminary settlement of the claims brought against it in the Delphi securities class action (E.D. Mich.). The case, originally filed in 2005, stems from Delphi’s financial restatement and subsequent bankruptcy.

Deloitte’s settlement is for $38.25 million. The settlement follows on the heels of Delphi’s related $342 million settlement announced last September. Reuters has an article.

A couple of settlement items:

(1) The Tyco settlement has been approved. Not every class member will be happy, however, as the court rejected the fee objections raised by three institutional investors. As requested, the plaintiffs’ attorneys will receive $464 million, believed to be the largest fees payout ever by a single company defendant in a securities class action. Reuters and the Associated Press have articles.

(2) Court approval, however, is not the final step in a settlement. The funds have to be distributed, which has turned out to be problematic in the Computer Associates case. The Wall Street Journal has a report discussing the accidental overpayments to some claimants. The settlement administrator is trying to get the money back, but many of the checks have been cashed.

Biovail Corporation (NYSE: BVF) (TSX: BVF), an Ontario-based specialty pharmaceutical company, has announced the preliminary settlement of the securities class action pending against the company in the S.D. of New York. Originally filed in 2003, the case stems from allegations that the company made false financial projections.

The settlement is for $138 million, of which Biovail estimates it will pay $85 million after settling all insurance claims. The 10b-5 Daily has previously posted on the tumult surrounding the Biovail securities litigation, including the company’s attempts to sue short-sellers of its stock.

Sonus Networks, Inc. (NASDAQ: SONS), a Massachusetts-based provider of voice infrastructure equipment and software for wireline and wireless service providers, has announced the preliminary settlement of one of two securities class actions pending against the company in the D. of Massachusetts. The settled case, originally filed in 2004, stems from allegations related to a large revenues restatement.

The settlement is for $40 million, and the company has yet to determine the portion, if any, of its $15.3 million in available insurance coverage that will be allocated to the settlement. The 10b-5 Daily has previously posted about the motion to dismiss decision in the case.

American Italian Pasta Company (PINKSHEETS: AIPC), a Missouri-based producer of dry pasta, has announced the preliminary settlement of the securities class action pending against the company in the W.D. of Missouri. The case, originally filed in August 2005, stems from allegations that AIPC failed to disclose materially adverse facts in its financial statements.

The settlement covers the securities class action claims against AIPC (but not related derivative claims) and has a total value of $25 million. Of that total value, the company’s insurers will pay $11 million in cash and the company will issue $14 million in common shares.

Mercury Interactive Corp., a California-based software company acquired by Hewlett-Packard Co. in 2006, agreed earlier this week to the preliminary settlement of the securities class action pending against the company in the N.D. of California. The case was originally filed in 2005 and alleges that executives at the company backdated stock options and made false or misleading statements concerning Mercury Interactive’s financial results.

The settlement is for $117.5 million and is the largest to date involving stock options backdating. Press coverage can be found in the Wall Street Journal (subscrip. req’d) and the New York Times.