Harmony Gold Mining Company Limited (ADS) (NYSE: HMY) Investor Securities Class Action Lawsuit 04/16/2008

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Company Name(s): 
Harmony Gold Mining Company Limited
Case Name: 
Harmony Gold Mining Company Limited Shareholder Class Action Lawsuit 04/16/2008
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NYSE: HMY
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
04/16/2008
Class Period Begin: 
04/25/2007
Class Period End: 
08/07/2007
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
06/16/2008
Date Settled: 
08/02/2011
Settlement Amount: 
$9,000,000
Deadline to Participate in Settlement: 
01/09/2012
Summary: 

January 29, 2013 - The U.S. Court of Appeals for the Second Circuit affirmed the judgement of the district court.

December 13, 2011 - The lead plaintiff filed a notice of appeal.

November 14, 2011 - The court approved the settlement, the plan of allocation, the motion for attorneys’ fees and expenses, and dismissed the action with prejudice.

November 10, 2011 - The court held a final settlement hearing.

August 2, 2011 - The court preliminarily approved the settlement.

July 18, 2011 - Parties filed a stipulation of settlement.

March 19, 2010 - The court denied the defendant's motion to dismiss.

March 6, 2009 - The defendant filed a motion to dismiss.

January 7, 2009 - The lead plaintiff filed an amended complaint on behalf of investors who purchased American Depositary Shares (ADS), call options, and/or sellers of Harmony Gold Mining Company Limited's put options of Harmony Gold Mining Company Limited (NYSE: HMY) between April 25, 2007 and August 7, 2007. The lead plaintiff alleges that the defendant violated the Securities Exchange Act of 1934 by issuing false and misleading statements between April 25, 2007 and August 7, 2007.

November 17, 2008 - The lead plaintiff filed a notice of voluntary dismissal, dismissing without prejudice any and all claims against the individual defendants.

October 17, 2008 - The lead plaintiff and lead counsel were appointed.

June 16, 2008 - A lead plaintiff motion was filed.

April 16, 2008 - An investor in American Depositary Shares (ADS) and sellers of Harmony Gold Mining Company Limited's put options of Harmony Gold Mining Company Limited (NYSE: HMY) filed a lawsuit in the U.S. District Court for the Southern District of New York against Harmony Gold Mining Company Limited over alleged violations of Federal Securities between April 2, 2007 and August 7, 2007.

The complaint charges Harmony Gold Mining Company Limited and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Harmony Gold Mining Company Limited is a gold producer that operates 22 individual mines and projects across the world. More specifically, the complaint alleges that Harmony Gold Mining Company Limited failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the company’s costs had significantly increased throughout 2007; (2) that the company had underreported these increased costs in its previously issued financial statements; (3) that the company had experienced a significant decrease in gold production for the third quarter 2007 due to production problems at various sites, which had already materialized at the time its Class Period statements were made; (4) that the company had failed to disclose the full impact that these production problems would have on the Company’s financial and operational results; (5) that, as a result of the company’s understatement of its costs and its lower production for the quarter, the company had understated its operating costs and overstated its net profit for the third quarter; (6) that, as a result of the foregoing, the company’s financial statements were materially false and misleading at all relevant times; (7) that the Company would be forced to take substantial charges in the fourth quarter 2007 to remedy such failures, causing the company to report a net loss for the quarter; (8) that the company lacked adequate internal and financial controls; and (9) that, as a result of the above, Harmony Gold Mining Company Limited’s statements about its financial well-being and future business prospects were lacking in any reasonable basis when made.

On August 6, 2007, Harmony Gold Mining Company Limited reported preliminary financial and operational results for its fourth quarter and fiscal year 2007 (ended June 30, 2007). Harmony Gold Mining Company Limited warned that its financial results for the quarter were “expected to differ significantly from those of the three previous quarters as well as from the analysts’ consensus.” For the fourth quarter, Harmony Gold Mining Company Limited stated that it expected to report a headline loss of between 130 and 160 SA cents per share, compared with a headline profit of 58 SA cents per share for the third quarter. This quarterly loss was primarily the result of Harmony Gold Mining Company Limited recording significantly higher costs for the quarter, and included a 25 to 28 percent increase in Harmony Gold Mining Company Limited’s total cash operating costs as a result of “the newly installed accounting software system that resulted in some of the March quarter’s costs being captured in the June 2007 quarter.” Thus, Harmony Gold Mining Company Limited had substantially understated its costs in previous quarters and was forced to take substantial charges in the fourth quarter to remedy such underreported costs. Additionally, Harmony Gold Mining Company Limited reported that its cost base had increased by 8 to 12 percent from the previous six months. Finally, Harmony Gold Mining Company Limited announced that its Chief Executive Officer had resigned, “with immediate effect.”

On this news, Harmony Gold Mining Company Limited's shares (NYSE: HMY) fell $2.45 per share, or over 18 percent, to close on August 6, 2007 at $11.02 per share, on unusually heavy trading volume. The following day, Harmony Gold Mining Company Limited’s shares declined an additional $1.57 per share, or over 14 percent, to close on August 7, 2007 at $9.45 per share, again on heavy trading volume. This closing price on August 7, 2007 represented a two-day decline in Harmony Gold Mining Company Limited’s shares of $4.02 per share, or 29.8 percent, and a cumulative decline of $7.25 per share, or over 43.4 percent, from the value of Harmony Gold Mining Company Limited’s shares high of $16.70 on April 25, 2007.