S3 Incorporated (n/k/a SONICblue) - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

S3 Incorporated (n/k/a SONICblue) Summary: According to the Company’s Form 10-Q, for the quarter ended September 30, 2002, in February 2002, the California Superior Court for Santa Clara County entered its preliminary approval of an agreement to settle the consolidated state court class action lawsuit. Under the terms of the class action settlement, SONICblue will contribute 2,401,501 shares of SONICblue common stock and Deloitte & Touche will contribute up to $250,000 in full settlement of all claims. In April 2002, the Superior Court granted final approval to that settlement, dismissing the case. In May 2002, the Superior Court also approved the settlement of the related California derivative litigation. The derivative settlement calls for the defendants to contribute to the settlement their respective benefits under certain directors and officers insurance policies in an amount of approximately $4.6 million which, net of attorneys' fees and litigation costs, would be paid to SONICblue, which payments have been made.

Although the federal action was previously dismissed, the class in the federal action is settling with the state action. According to the Notice of Settlement for the state action, all of these state and federal class actions are herein referred to collectively as the "Litigation."

By the docket dated June 29, 1998, on April 29, 1998, Plaintiff's filed a motion for voluntary dismissal of action without prejudice. The Court entered the Minutes on June 19, 1998, granting the motion and the federal action was terminated.

Since November 1997, a number of complaints have been filed in federal and state courts seeking an unspecified amount of damages on behalf of an alleged class of persons who purchased shares of the Company's common stock at various times between April 18, 1996 and November 3, 1997. The complaints name as defendants the Company, certain of its officers and former officers, and certain directors of the Company, asserting that they violated federal and state securities laws by misrepresenting and failing to disclose certain information about the Company's business. In addition, certain stockholders have filed derivative actions in the state courts of California and Delaware seeking recovery on behalf of the Company, alleging, among other things, breach of fiduciary duties by such individual defendants.

Plaintiff alleges that during the Class Period defendants' fraudulently or recklessly inflated S3's earnings and revenues by improperly recognizing between $40 million and $70 million in revenues from products shipped to distributors which were not final sales. Defendants' improper recognition of revenue violated the Company's established revenue recognition policy and Generally Accepted Accounting Principles, and caused the Company's financial statements to be materially overstated.

INDUSTRY CLASSIFICATION:
SIC Code: 3576
Sector: Technology
Industry: Computer Networks

COMPANY/ISSUER NAME:	S3 Incorporated
COMPANY/ISSUER TICKER:	SIII
COMPANY WEBSITE:	http://www.diamondmm.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Rudolph, et al., v. S3 Incorporated, et al.

COURT: N.D. California	DOCKET NUMBER: 97-CV-4066
JUDGE NAME: Hon. Vaughn R. Walker
DATE FILED: 11/05/1997	SOURCE: Business Wires
CLASS PERIOD START: 7/15/1996	CLASS PERIOD END: 11/03/1997
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Bernstein Liebhard & Lifshitz LLP (New York, NY) 10 E. 40th Street, 22nd Floor, New York, NY, 10016 (voice) 800.217.1522, (fax) , info@bernlieb.com Kaufman, Miller, Dickstein & Grunspan , , , (voice) , (fax) , Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Spector Roseman & Kodroff (San Diego) 1818 Market Street, Suite 2500, Philadelphia, PA, 19103 (voice) 215.496.0300, (fax) 215.496.6611, Wolf Popper, LLP 845 Third Avenue, New York, NY, 10022-6689Ave (voice) 877.370.7703, (fax) 212.486.2093, IRRep@wolfpopper.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Complaint for Violation of the Securities Exchange Act of 1934
Type: Complaint		Date on the document: 11/05/1997
Letter from State of Wisconsin Investment Board ( SWIB ) to advise the Court that it will not seek lead plaintiff status
Type: Other		Date on the document: 01/02/1998
Declaration Of James A. Caputo In Support Of Moving Plaintiffs' Motion For Voluntary Dismissal Of Action Without Prejudice
Type: Declaration		Date on the document: 04/28/1998
Notice Of Motion And Motion For Voluntary Dismissal Of Action Without Prejudice And Moving Plaintiffs' Memorandum Of Points And Authorities
Type: Motion		Date on the document: 04/28/1998
Response by the S3 Defendants' to Plaintiffs' Motion for Voluntary Dismissal
Type: Motion		Date on the document: 05/19/1998
Litigants
Type: Other		Date on the document: 06/29/1998
U.S. District Court Civil Docket
Type: Docket		Date on the document: 06/29/1998
U.S. District Court Civil Docket
Type: Docket		Date on the document: 02/25/2002

OTHER DOCUMENTS
Class Action Complaint
Case Name and/or Number: Zinberg
Type: Complaint		Date on the document: 11/06/1997
Class Action Complaint
Case Name and/or Number: Sanchez
Type: Complaint		Date on the document: 11/17/1997
Litigants
Case Name and/or Number: Sanchez
Type: Other		Date on the document: 01/21/1998
U.S. District Court Civil Docket
Case Name and/or Number: Sanchez
Type: Docket		Date on the document: 01/21/1998
Litigants
Case Name and/or Number: Zinberg
Type: Other		Date on the document: 06/29/1998
U.S. District Court Civil Docket
Case Name and/or Number: Zinberg
Type: Docket		Date on the document: 06/29/1998
Notice Of Pendency And Proposed Settlement Of Class Action
Case Name and/or Number: In Re S3 Securities Litigation
Type: Notice		Date on the document: 02/19/2002
U.S. District Court Civil Docket
Case Name and/or Number: Zinberg, et al., v. S3 Incorporated, et al.
Type: Docket		Date on the document: 02/25/2002

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