Cadence Design Systems Inc. Case 10/30/2008
DECEMBER 2011 - According to the Notice:
Security and Time Period: Cadence common stock, put and call options, 1.375% Notes due December 15, 2011, and 1.5% Notes due December 15, 2013 purchased between April 23, 2008 and December 10, 2008, inclusive.
Settlement Fund: $38,000,000 in cash plus any interest earned. Your recovery will depend on the timing of your purchases and sales of Cadence Publicly Traded Securities during the Class Period. Based on the information currently available to Lead Plaintiff and the analysis performed by its damage consultants, it is estimated that if Class Members submit claims for 100% of the shares eligible for distribution under the Plan of Allocation (described below), the estimated average distribution per share of common stock will be approximately $0.19 before deduction of Court-approved fees and expenses, including the cost of notifying Members of the Class and settlement administration and any attorneysf fees and expenses awarded by the Court to counsel for the Lead Plaintiff. Historically, actual claims rates are less than 100%, which result in higher distributions per share. A Class Memberfs actual recovery will be a proportion of the Net Settlement Fund determined by that claimantfs recognized claim as compared to the total recognized claims of all Class Members who submit valid Proof of Claim and Release forms (\Proof of Claim.).
Reasons for Settlement: Avoids the costs and risks associated with continued litigation, including the danger of no recovery.
If the Case Had Not Settled: Continuing with the case could have resulted in loss at summary judgment, trial or on appeal. The two sides vigorously disagree on both liability and the amount of money that could have been won if Lead Plaintiff prevailed at trial. The parties disagree about: (1) the method for determining whether the price of Cadence Publicly Traded Securities was artificially inflated during the relevant period; (2) whether there was any such inflation and the amount of any such alleged inflation; (3) that there was any wrongdoing on the part of Defendants; (4) the extent that various facts alleged by Lead Plaintiff influenced the trading price of Cadence Publicly Traded Securities during the Class Period; and (5) whether the facts alleged were material, false, misleading or otherwise actionable under the federal securities laws.
NOVEMBER 2011 - Preliminary approval of proposed settlement.
JUNE 2011 - A proposed $38 million settlement to resolve all claims against Cadence Design Systems.
On Thursday, October 30, 2008, a law firm filed on behalf of a shareholder of Cadence Design Systems, Inc. (NASDAQ: CDNS) a proposed class action lawsuit in the United States District Court for the Northern District of California on behalf of all purchasers of Cadence Design Systems, Inc. (NASDAQ: CDNS) common stock during the period between April 23, 2008 and October 22, 2008 over alleged violations of the Securities Exchange Act of 1934.
According to the complaint the plaintiff alleges that Cadence Design Systems, Inc. (”Cadence”) and certain of its current and former officers violated the Securities Exchange Act of 1934 by misrepresenting Cadence’s financial performance and prospects, overstating its revenues, and causing it to file false and misleading financial statements with the SEC. Specifically the stockholder alleges that the defendants allegedly caused Cadence to improperly report approximately $24 million in revenue in the first quarter of 2008 and in the six months ended June 28, 2008 that will not be earned until the later quarters and, therefore, should be properly recognized ratably over the duration of the customer contracts. Reportedly Cadence announced on October 15, 2008 the departures of its Chief Executive Officer and four other senior executives. The price of Cadence common stock dropped approximately 15%. Then on October 22, 2008, defendants surprised investors by acknowledging that the Cadence was reviewing the recognition of revenue related to customer contracts signed in the first quarter of 2008 and that it expected to restate its financial statements not only for that quarter, but also the first half of 2008 and as a result of this news Cadence’s stock price dropped another 25%, as the artificial inflation caused by defendants’ false and misleading statements came out of the stock price, so the lawsuit.