ORBCOMM Inc. Case 9/20/2007 UPDATE

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Company Name(s): 
ORBCOMM
Case Name: 
ORBCOMM Inc. Case 9/20/2007
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Proposed
Affected Securities
NASDAQ: ORBC
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
09/20/2007
Class Period Begin: 
11/03/2006
Class Period End: 
08/14/2007
Settlement Amount: 
$2,450,000
Summary: 

ORBCOMM Inc. Case 9/20/2007: UPDATE

According to a press release from July 30, 2009, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the Court, that the above-captioned consolidated action has been certified as a class action for settlement purposes only and that a Settlement valued at $2.45 million has been proposed. A hearing will be held on October 15, 2009, at 10:00 a.m., before the Honorable William H. Walls, U.S.D.J., in Courtroom 4D of the Martin Luther King, Jr. Federal Building & U.S. Courthouse, 50 Walnut Street, Newark, New Jersey 07101, for the purpose of determining: (1) whether the proposed Settlement should be approved by the Court as fair, reasonable and adequate; (2) whether, thereafter, this litigation should be dismissed with prejudice as set forth in the Stipulation; (3) whether the Plan of Distribution is fair, reasonable and adequate and therefore should be approved; and (4) whether the application of Plaintiffs' Counsel for attorneys' fees and/or expenses should be approved.

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According to a law firm press release, the complaint charges ORBCOMM and two of its officers and directors with violations of the Securities Act. ORBCOMM is a satellite-based data communication company that operates a two-way wireless data messaging system optimized for narrowband data communication worldwide.
According to the complaint, on or about October 30, 2006, ORBCOMM filed with the Securities and Exchange Commission a Form S-1/A Registration Statement (the “Registration Statement”), for the IPO. On or about November 3, 2006, the Prospectus with respect to the IPO, which forms part of the Registration Statement, became effective and, including the exercise of the over-allotment, more than 9.2 million shares of ORBCOMM’s common stock were sold to the public, thereby raising more than $101 million. The complaint alleges that the Prospectus contained inaccurate statements of material fact because it failed to disclose that demand for the Company’s products was weakening as certain end-users were delaying purchases and international sales were being negatively impacted by delays in modifying regional applications.
Then, on August 14, 2007, ORBCOMM issued a press release announcing its financial results for the second quarter of 2007, the period ending June 30, 2007. In the press release and thereafter, the Company revealed that it was experiencing weakening demand for its products and services and was not adding subscribers at the rates it had anticipated. In response to this announcement, the price of ORBCOMM common stock declined from $11.18 per share to $7.86 per share on extremely heavy trading volume.