American Capital Ltd. Case 12/15/2008

April 2, 2012 (Update) -- Proposed settlement. According to the Notice:

Purpose of Notice and Description of Litigation:
The purpose of this Notice is to inform you of a proposed settlement of the Litigation as described below. This Notice describes rights you may have under the proposed settlement and what steps you may take in relation to this Litigation. This Notice is not an expression of any opinion by the Court as to the merits of any of the claims or defenses asserted by any party in this Litigation, or the fairness or adequacy of the proposed settlement. This Notice incorporates by reference the definitions set forth in the Parties’ Stipulation of Settlement (the “Settlement Stipulation”), and all capitalized terms used, but not defined herein, shall have the same meanings as in the Settlement Stipulation.

Summary of the Settlement:
Recovery to the Settlement Class: The aggregate amount of the Settlement Fund proposed to be distributed to the Class is $18,000,000 plus interest earned thereon and less the costs of notice to the Settlement Class, costs of administration of the Settlement Fund, taxes and tax expenses associated with the Settlement Fund, and any amounts awarded by the Court to Co-Lead Counsel for attorneys’ fees and reimbursement of costs and expenses, and any amounts awarded by the Court to Plaintiffs. Co-Lead Counsel estimate that the average recovery per damaged share of common stock under the Settlement is approximately $0.24, before deduction of Court-awarded attorneys’ fees and expenses. A Settlement Class Member’s actual recovery will be a proportion of the Net Settlement Fund determined by the authorized claimant’s claim as compared to the total recognized claims of all Settlement Class Members who submit acceptable Proofs of Claim and Releases. Individual Settlement Class Members’ actual recoveries under the Settlement will vary, depending upon when their Shares were purchased, the amount they paid for their Shares, the amount of proceeds they received, if any, if the Shares were sold, when the Shares were sold, and the number of claimants who actually file Proofs of Claim and Releases.

Potential Outcome of the Case:
The Parties disagree on both liability and damages and do not agree on the amount of damages per Share that would be recoverable if Plaintiffs were to have prevailed on each claim alleged. Among other things, the Parties do not agree on (i) whether Defendants made any misrepresentations; (ii) whether any Defendants acted with knowledge or deliberate recklessness with respect to the alleged misrepresentations; (iii) whether any alleged damages are attributable to the alleged misrepresentations; (iv) whether any drops in the price of the shares after the Settlement Class Period are attributable to the alleged misrepresentations; (v) the appropriate damages model for measuring the alleged damages attributable to the alleged misrepresentations; and (vi) the extent to which external factors (such as industry conditions and market forces) influenced the trading price of the Shares.

December 15, 2008 -- A shareholder of American Capital Ltd. (NASDAQ:ACAS) has filed a proposed securities class action lawsuit in the United States District Court for the District of Maryland on behalf of purchasers of securities of American Capital Ltd. between October 30, 2007 and November 7, 2008, against American Capital Ltd. over alleged violations of Federal Securities laws.

According to the complaint the plaintiff alleges that American Capital Ltd. (NASDAQ:ACAS ; “American Capital) and certain of its officers and directors violated the Securities Exchange Act of 1934 by failing to disclose and misrepresented the material adverse facts which were known to defendants or recklessly disregarded by them and throughout above stated period and most of the company’s history, investors were lured to invest in American Capital’s stock due to its large and dependable dividend payments and investors were repeatedly assured that such dividend payments would continue.

But then, so the lawsuit, on November 10, 2008, American Capital shocked investors when it reported a quarterly loss, suspended dividends, and stated that it would retain capital gains from investments as opposed to distributing them to shareholders as previously stated, and as a result of this news, the American Capital’s shares (NASDAQ:ACAS) shares fell $5.90 per share, or 42.85 percent, to close on November 10, 2008 at $7.87 per share, so the lawsuit.