Lucent Technologies has agreed to pay more than $600 million to settle shareholder lawsuits, which alleged that Lucent misled investors who purchased the company’s stock between October 26, 1999 and December 21, 2000.
The settlement will provide compensation for a record number of shareholders in a securities suit, and is said to mark the second largest securities settlement in history.
David J. Bershad, a senior partner in Milberg Weiss Bershad Hynes & Lerach, negotiated the global agreement. ‘We are proud of this settlement,’ said Bershad. ‘It is a victory for the hundreds of thousands of investors who purchased Lucent shares.’
Milberg Weiss Bershad Hynes & Lerach filed a class action lawsuit in 2000 on behalf of lead plaintiffs Teamsters Locals 175 and 505 of West Virginia.
The complaint charged that during the class period Lucent misrepresented the demand for its optical networking products and engaged in a variety of improper accounting practices designed to artificially inflate Lucent’s publicly reported financial results, including booking hundreds of millions of dollars of revenue from false sales.
When the truth about the company’s products became known and the company was forced to issue financial restatements, the stock price plummeted, from a class period high of $84.19 to $12.19. After the class period ended, Lucent’s share price continued to erode dropping to below a dollar per share in late 2000.
‘The resolution demonstrates the impact of major institutional investors, like the Teamsters, can have, working in tandem with the plaintiff’s bar to achieve fair recoveries for victims of corporate wrongdoing while keeping in mind the viability of the defendant’s enterprise,’ Bershad continued.
This settlement also resolves all outstanding class action cases of related litigation against Lucent involving securities fraud. Lucent will pay for the settlement in cash, Lucent stock, and Lucent warrants.
‘This settlement will permit Lucent to put the past behind and build for the future,’ Bershad concluded.