Occam Networks Inc. Case 04/26/2007 UPDATE
September 11, 2009
Occam Networks, Inc. (NASDAQ:OCNW) announced on September 11, 2009, that "it has agreed to settle and resolve a stockholder class action lawsuit initially filed on April 26, 2007 against Occam, certain of its current and former officers and directors, Occam’s current and former outside auditors, and the lead underwriter of Occam’s November 2006 secondary public offering. The litigation is pending in the United States District Court for the Central District of California and relates to a restatement of Occam’s historical financial statements that was announced and completed during 2007. The settling parties have entered into a memorandum of understanding and will sign and submit a formal, binding stipulation of settlement to the court in the coming weeks. The settlement will resolve this matter as to all defendants other than Occam’s current outside auditor who is not part of this settlement. The settlement provides for a payment to the class of $12.66 million, of which Occam has agreed to contribute $1.7 million and the balance of which will come from Occam’s insurers and another settling defendant. "
According to Occam Networks the class action settlement is subject to preliminary and, following notice to class members, final approval by the United States District Court for the Central District of California and final approval of this settlement would mark the end of stockholder litigation involving Occam related to the financial restatement announced in October 2007.
The Complaint alleges that during the May 2, 2006 through Apr 17, 2007, Class Period, defendants knew or recklessly disregarded that Occam Networks, Inc.’s (the “Company”) reported financial results were the product of improper revenue recognition concerning the Company’s commitments to provide customers with (i) software, hardware and software maintenance, (ii) hardware and software upgrades, and (iii) training, and other services in connection with customers’ purchases of the Company’s network equipment, and that during the Class Period the Company’s internal controls were materially defective.
On April 2, 2007, after the close of trading, Occam Networks surprised investors by disclosing that it would not file its Annual Report on Form 10-K for the year ended December 31, 2006, because “its Audit Committee is reviewing the Company’s commitments to provide customers with software, hardware and software maintenance, hardware and software upgrades, training, and other services in connection with customers’ purchases of the Company’s network equipment.” …
On April 3, 2007, the next trading day, Occam Networks shares declined from the previous day’s close of $11.10 per share, to close on April 3, 2007,at $8.51 per share — a decline of $2.59 per share or approximately 23%, on heavier than usual volume. Then on April 17, 2007, after the close of trading, Occam disclosed that that it would “not file its Annual Report on Form 10-K for the fiscal year ended December 31, 2006 by today’s 15-day extended filing deadline.” On April 23, 2007, the Company disclosed that it received a notice from NASDAQ stating that because the Company had not timely filed its annual report, Occam Networks was not in compliance with NASDAQ marketplace rules.