On July 10, 2003, the Court entered the Order and Final Judgment signed by U.S. District Judge Denis R. Hurley. The Plaintiff’s counsel was awarded $1,695.000 of the settlement amount in fees and $197,477.48 reimbursement and expenses. Earlier, on January 29 a Stipulation and Order for Settlement was filed and an Order preliminarily approving the settlement was signed by Judge Hurley.
According to a plaintiff law firm’s web site, on December 27, 1999, the company filed for Chapter 11 Bankruptcy protection. A settlement of $5,650,000 was reached.
As reported in the Company's Form 10-Q For the Quarterly Period Ended September 30, 1999, in August 1999, the Company reached an agreement in principle to settle the Class Action, subject to certain contingencies. Under the terms of the agreement in principle, the Class Action would be settled for a payment of $20 million, of which $10 million would be funded by the Company's insurance carrier and $10 million by the Company. The agreement in principle contemplates that the Company's $10 million contribution would be paid either from the proceeds of the sale of the Company or, at the Company's option, from funds otherwise available. By letter dated October 25, 1999, the Company advised the Court that the Company would not be in a position to proceed with the agreement in principle because, due to changed circumstances, the sale of the Company contemplated thereby would likely not occur and the Company lacks the funds to pay its portion of the proposed settlement. The Court has scheduled a status conference regarding this matter to be held on November 29, 1999.
The class actions were consolidated into an amended consolidated class action complaint as of January 29, 1999, and lead counsel was selected. The amended consolidated class action complaint asserts claims against the Company and the other defendants for violations of Sections 11, 12(2) and 15 of the Securities Act of 1933, as amended, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder with respect to alleged material misrepresentations and omissions in public filings made with the Securities and Exchange Commission and certain press releases and other public statements made by the Company and certain of its officers relating to the Company's business, results of operations, financial condition and future prospects, as a result of which, it is alleged,the market price of the Company Common Stock was artificially inflated during the putative class periods.
The original complaint was a class action lawsuit commenced against defendants alleging that GFI positively portrayed its 1997 acquisitions, representing that integration was proceeding smoothly and that the acquisitions would be accretive to revenues and earnings in the short term. Contrary to those alleged misrepresentations, however, GFI was forced to reveal, on March 23, 1998, that it would record $36.2 million in pretax charges to its fourth quarter 1997 earnings, related primarily to problems the Company encountered integrating its acquisitions. This news came only weeks after the Company had reassured analysts, who had predicted a profit in the quarter, that it was on track to meet the consensus estimates of $0.14 per share. Instead, GFI lost $31.1 million or $1.47 per share for the fourth quarter, compounding substantial losses for the entire 1997 fiscal year. GFI also acknowledged that it would experience reduced revenues and operating results for 1998 as well. In response, the market price of GFI common stock plunged 59% in one day's trading, from a Class Period high of $19 5/8 per share at the close of trading on Friday, March 20, 1998, to $8 1/16 per share at the close of trading on Monday, March 23, 1998. Trading was halted on March 23, 1998, for most of the day. As a result, plaintiff and Class members have suffered substantial damages.