Motorola Case 08/09/2007
FEBRUARY 2012 - $200 million proposed settlement. According to the Notice:
STATEMENT OF PLAINTIFFS’ RECOVERY
The proposed settlement will result in the creation of a cash settlement fund in the principal amount of Two Hundred Million Dollars ($200,000,000.00), plus any interest that may accrue thereon (the “Settlement Fund”).
The Settlement Fund, subject to deduction for, among other things, costs of class notice and administration and certain taxes and tax related expenses and for attorneys’ fees and expenses as approved by the Court, will be available for distribution to Class Members. Your recovery from this fund will depend on a number of variables, including the number and type of Motorola publicly traded securities you purchased or otherwise acquired during the period from July 19, 2006 through January 4, 2007, inclusive, and the timing of your purchases and any sales. In the unlikely event that 100% of the eligible publicly traded securities of Motorola purchased or acquired by Class Members and entitled to a distribution under the Plan of Allocation described below participate in the settlement, the estimated average distribution per share of Motorola common stock will be approximately $0.28 before deduction of Court-approved fees and expenses. Historically, actual claim rates are lower than 100%, resulting in higher per share distributions.
STATEMENT OF POTENTIAL OUTCOME
Plaintiffs and Defendants do not agree on the average amount of damages per share, if any, that would have been recoverable if Plaintiffs were to have prevailed on each claim alleged. Defendants deny that they are liable in any respect or that Plaintiffs or the Class suffered any injury. The issues on which the parties disagree are many, but include: (1) whether Defendants engaged in conduct that would give rise to any liability to the Class under the federal securities laws, or any other laws; (2) whether Defendants have valid defenses to any such claims of liability; (3) the appropriate economic model for determining the amount by which the prices of Motorola publicly traded securities were allegedly artificially inflated (if at all) during the Class Period; (4) the amount by which the prices of Motorola publicly traded securities were allegedly artificially inflated (if at all) during the Class Period; (5) the effect of various market forces on the prices of Motorola publicly traded securities at various times during the Class Period; (6) the extent to which external factors influenced the prices of Motorola publicly traded securities at various times during the Class Period; (7) the extent to which the various matters that Plaintiffs alleged were materially false or misleading influenced (if at all) the prices of Motorola publicly traded securities at various times during the Class Period; and (8) the extent to which the various allegedly adverse material facts that Plaintiffs alleged were omitted influenced (if at all) the prices of Motorola publicly traded securities at various times during the Class Period.
REASONS FOR SETTLEMENT
Plaintiffs believe that the proposed settlement is a good recovery and is in the best interests of the Class. Because of the risks associated with continuing to litigate and proceeding to trial, there was a danger that the Class would not have prevailed on any of its claims, in which case the Class would receive nothing. Also, the amount of damages recoverable by the Class was and is challenged by Defendants. Recoverable damages in this case are limited to losses caused by conduct actionable under applicable law and, had the Litigation gone to trial, Defendants would have asserted that any losses of Class Members were caused by non-actionable market, industry, or general economic factors. Defendants would have also asserted that throughout the Class Period the uncertainties and risks associated with the purchase of Motorola publicly traded securities were fully and adequately disclosed. The proposed settlement provides an immediate benefit to Class Members, and will avoid the years of delay that would likely occur in the event of a contested trial and appeals.
JULY 2011 - Motorola Inc. lost a bid for dismissal of a proposed class-action securities lawsuit accusing it of misleading shareholders about optimistic earnings forecasts and delays in delivering 3G phones.
AUGUST 2007 - According to a press release dated August 9, 2007, the complaint charges Motorola and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Motorola builds, markets and sells products, services and applications that make connections to people, information and entertainment through broadband, embedded systems and wireless networks.
Specifically, the complaint alleges that in the summer of 2006, Motorola’s poor financial performance had depressed its stock price to below $19 per share. In order to artificially inflate the price of Motorola stock, defendants began a series of false and misleading statements regarding the Company’s business and prospects. Specifically, defendants repeatedly told investors to expect strong growth in sales and revenues. On October 17, 2006, defendants announced that Motorola had failed to meet its revenue and sales projections. As a result of this announcement, Motorola’s stock price declined over 7% in two trading days. Then on January 4, 2007, defendants announced that Motorola’s fourth quarter 2006 results also failed to meet expectations. This time, the Company’s stock price declined almost 8%.