State Street Corporation Case 6/30/2008
May 2, 2012 (Update) -- Proposed $6,250,000 settlement in the State Street Corporation shareholder class action for those who purchased shares of the SSgA Yield Plus Fund between July 1, 2005 and May 31, 2008, inclusive.
According to the Notice:
Lead Plaintiff’s Reasons for Settlement
The principal reason for Lead Plaintiff’s consent to the Settlement is to provide an immediate benefit to the Class. This benefit must be compared to the risk that no recovery might be achieved, given the fact that the Court has dismissed Lead Plaintiff’s complaint with prejudice, and that Lead Plaintiff faced an uncertain appeal in the Second Circuit Court of Appeals. While Lead Plaintiff believes that his claims have merit, Lead Plaintiff recognizes the expense of continued proceedings and that Lead Plaintiff and the Class might not have prevailed on any or all of their claims. The claims advanced by the Class involve numerous complex legal and factual issues which would require extensive expert testimony and would add considerably to the expense and duration of the Litigation. The two sides vigorously disagree on both liability and the amount of money that could have been won if Lead Plaintiff prevailed on appeal and then at trial. The parties disagree about whether Lead Plaintiff would succeed on appeal and if so, among other things: (i) the amount of alleged damages, if any, that could be recovered at trial; (ii) the other, non-actionable causes of the losses to the Fund during the relevant period; (iii) whether any allegedly false or misleading statements in the registration statements and prospectuses were the proximate cause of any investor losses; (iv) the extent that various facts alleged by the Lead Plaintiff influenced the net asset value of the Fund during the relevant period; and (v) whether the allegedly misstated facts were material, false, misleading or otherwise actionable under the securities laws. This Settlement therefore enables the Class to recover without incurring any additional risk or costs. As a result, Lead Plaintiff believes the Settlement is a fair, reasonable, and adequate recovery for the Class.
Defendants’ Reasons for Settlement
The Defendants have denied and continue to deny each and all of the claims and contentions alleged by the Lead Plaintiff on behalf of the Class. The Defendants also have denied and continue to deny, among other things, the allegations that the offering materials for the SSgA Yield Plus Fund shares were materially false or misleading or that Lead Plaintiff or the Class suffered compensable damages, or that any causal connection could be established between the alleged misrepresentations and any alleged harm to Lead Plaintiff or the Class.
Nonetheless, the Defendants have concluded that further conduct of the case would be protracted and expensive, and that it is desirable that the case be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation in order to limit further expense, inconvenience and distraction, to dispose of the burden of protracted litigation, and to permit the operation of the Defendants’ business without further distraction and diversion caused by the continuation of the case. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases such as the Litigation.
The Defendants have, therefore, determined that it is desirable and beneficial to them that the case be settled in the manner and upon the terms and conditions set forth in the Stipulation. The Defendants entered into the Stipulation without in any way acknowledging any fault, liability, or wrongdoing of any kind.
June 30, 2008 -- According to a law firm press release, a class action was filed on June 30, 2008 on behalf of purchasers of the SSgA Yield Plus Fund (NASDAQ: SSYPX) (the “Yield Plus Fund” or the “Fund”) who purchased shares of the Fund within the three years that preceded the filing of this lawsuit.
The complaint charges State Street Corporation (”State Street”), and certain related entities, among others, with violations of the Securities Act. State Street Global Advisors (”SSgA”) is the investment advisor to the entire group of mutual funds under the State Street name.
On or about November 9, 1992, defendants began offering shares of the Yield Plus Fund pursuant to an initial registration statement, filed with the SEC as a Form 485BPOS (the “Registration Statement”). The complaint alleges that defendants solicited investors to purchase shares of the Yield Plus Fund by making statements in the Registration Statement and subsequent supplemental prospectuses that described the “investment objective” of the SSgA Yield Plus Fund as investments “primarily in a diversified portfolio” with “high-quality debt securities” that include “high credit quality,” “sophisticated credit analysis” and “team based decision making by experienced investment professionals.” As alleged in the complaint, these statements were materially false and misleading because defendants did not adequately disclose the risks associated with investing in the Fund, including, for example, that the Fund was so heavily invested in high-risk mortgage-related or mortgage-backed securities.
By June 11, 2007, defendants slowly began lowering the value of the share price for the Yield Plus Fund. Since then, the value of the Yield Plus Fund’s share price has been precipitously lowered. By December 12, 2007, the value of the per-share price was reduced to $8.01. The shares were trading as low as $6.60 at the time of the filing of the complaint.