According to the docket, on December 18, 2003, the Court entered the Order and Final Judgment by U.S. District Judge John R. Tunheim. The settlement was approved as fair, reasonable and adequate. Plaintiffs’ counsel was awarded fees and expenses with interest.
By the Notice of Pendency of Class Actions, a Settlement Fund consisting of $12,450,000 in cash, plus interest, has been established. A hearing will be held on November 18, 2003 (the “Settlement Fairness Hearing”) to determine whether a proposed settlement of the Actions as set forth in the Stipulation of Settlement dated August 19, 2003, is fair, reasonable and adequate and to consider the proposed Plan of Allocation for the Settlement proceeds and the application for attorneys’ fees and reimbursement of expenses by Plaintiffs’ Counsel.
On August 24, 1999, the United States District Court for the District of Minnesota issued an order to dismiss with prejudice all claims alleged in the lawsuits. The plaintiffs subsequently appealed the decision to the U.S. Court of Appeals (8th Circuit), and the Court of Appeals with a three judge panel issued an opinion on October 25, 2001, reversing the United States District Court's dismissal order and remanding the actions to the United States District Court. Defendants moved to dismiss the options lawsuit on the grounds that stock option traders lack standing under federal securities law. The motion was argued on May 24, 2002. The motion was denied by order dated July 29, 2002. Pretrial discovery in the option lawsuit was stayed pending disposition of the motion to dismiss but will commence presently. In the other two lawsuits, pretrial discovery commenced in April 2002.
A total of 27 putative class actions were consolidated into two consolidated actions -- one on behalf of Plaintiffs claiming Green Tree stock losses (In re Green Tree Financial Corp. Stock Litig., Case No. 97-2666); the other on behalf of Plaintiffs claiming Green Tree options losses (In re Green Tree Financial Corp. Options Litig., Case No. 97-2679).
These actions were filed on behalf of persons or entities who purchased common stock or options of Green Tree during the alleged class periods that generally run from February 1995 to January 1998. These actions were brought pursuant to Sections 10(b), and 20(a), of the Securities and Exchange Act of 1934, Title 15 U.S.C. §§ 78j(b), 78t(a), and under Rule 10b-5 of the Securities and Exchange Commission ("SEC"), 17 C.F.R. § 240.10b-5, and they commonly claim that Green Tree employed unduly aggressive accounting methods so as to rachet up its reported profits and, thereby, to proportionally enhance the compensation package of Lawrence M. Coss ("Coss"), Green Tree's C.E.O., whose salary was tied to the company's reportedly ballooning profits. The Plaintiffs allege that they relied upon the integrity of the market -- particularly Green Tree's over-pitched profit statements -- and purchased Green Tree's artificially inflated securities, which lost much of their value when the corporation subsequently revised its financial reports.
The original complaint alleges that Green Tree and certain of its officers and directors violated the Securities Exchange Act of 1934 by making a series of false and misleading statements regarding, among other things, Green Tree's revenues and profits. In particular, it is alleged that defendants materially overstated revenues and profits by utilizing gain-on-sale accounting based upon unrealistic and unreasonable assumptions, and by setting-up inadequate reserves. The Complaint alleges that as a result of these material misrepresentations and omissions, persons and entities who purchased Green Tree common stock during the Class Period described above (the "Class") were damaged. Plaintiff will seek to recover damages on behalf of the Class if a Class is certified by the Court.
NOTE: Green Tree Financial Corporation (until 10/26/1999) is now Conseco Finance Corporation.