According to a press release dated February 9, 2005, Livent's former Chairman and Chief Executive and Livent's former President were ordered by Manhattan federal judge Victor Marrero to pay $23,333,146 to investors who bought notes issued by Livent, Inc., a now-bankrupt entertainment company. Judge Marrero made the ruling in granting summary judgment against Drabinsky and Gottlieb to plaintiffs in a class action lawsuit. The plaintiff class is comprised of investors who purchased notes included in a $125 million 1997 offering by Livent. Subsequent to the offering, Livent restated much of the key financial information that was disseminated to the investing public at the time of the offering. Numerous other defendants in the case, including CIBC Oppenheimer Securities Corp., an underwriter of the notes offering, auditor Deloitte & Touche, and Livent outside directors, have previously entered into settlements with the plaintiffs.
According to the docket posted for the Livent Noteholders Litigation, docket number 98-CV-7161, on November 12, 2004, the plaintiffs filed a motion for Summary Judgment against two remaining individual defendants. Earlier, on November 13, 2003, the Court entered the Final Order and Judgment signed by U.S. District Judge Victor Marrero approving the partial settlement as fair, reasonable, adequate and in the best interests of the Class. The court further awards attorneys' fees to lead plaintiffs' counsel in the amount of $1,375,000 and reimbursement of expenses to lead plaintiffs' counsel in the amount of $300,000.
By the Notice of Proposed Partial Settlement and Settlement Hearing for In Re: Livent, Inc. Noteholders Securities Litigation, Master File No. 98 Civ. 7161, dated September 29, 2003, a proposed Partial Settlement of the Litigation with defendant Deloitte & Touche Chartered Accountants (the “Settling Defendant”) has been established. The Settlement Hearing will be held on November 7, 2003 for the purpose of determining whether Lead Plaintiffs and Lead Plaintiffs’ Counsel have fairly and adequately represented the interests of the Class and whether the proposed Partial Settlement, in the amount of $5.5 million in cash, should be finally approved by the Court.
According to the same Notice of settlement, this is the third Partial Settlement in the case. The prior two partial settlements, with the Outside Director Defendants and CIBC Defendants, were the subject of previous Notices. No investors in Livent Notes objected to those partial settlements, and they were approved by the Court on October 18, 2002 and July 11, 2003, respectively, after fairness hearings. The partial settlement with the Outside Director Defendants was $4,250,000 in cash.
According to the latest docket posted for the Livent Securities Litigation, docket number 98-CV-5686, the settlement hearing was held on December 19, 2003, and on December 29, 2003, the Court entered the Judgment signed by U.S. District Judge Victor Marrero. Judgment was in favor of the plaintiffs and against the defendants .
By the Notice of Proposed Settlements and Settlement Hearing for In Re Livent, Inc. Securities Litigation, Master File No. 98 Civ. 5686, the first proposed settlement is with defendant Deloitte & Touche Chartered Accountants (the "Settling Defendant"
or "Deloitte"), pursuant to which $1.75 million will be paid into a settlement fund. The second proposed settlement is with defendant Robert Topol for no monetary consideration. The Settlement Hearing will be held at 12:00 p.m. on December 19, 2003, for the purpose of determining whether Lead Plaintiffs and Lead Plaintiffs' Counsel have fairly and adequately represented the interests of the Class and whether the proposed settlements of the Litigation should be finally approved by the Court.
According to the same Notice of settlement, this is the third Notice of Settlement(s) in the case. The prior two settlements were with the Outside Director Defendants and CIBC Defendants. The Outside Director Defendants previously had been dismissed from this Litigation in a ruling that had been subject to appeal. The Class subsequently settled all claims against those defendants for $250,000. That settlement was made final by Court Order dated October 18, 2002. In addition, a subclass of Livent investors who purchased Livent Stock in the period May 18, 1998 through August 7, 1998 reached a settlement with CIBC Wood Gundy and its affiliates (collectively referred to as "CIBC"), in which CIBC paid $2,200,000 in exchange for a release of all claims against them. That settlement was made final by Court Order dated January 27, 2003.
According to the docket for the case Griffin v. PaineWebber Inc., docket number 99-CV-2292, on January 29, 2003, the Court entered the Judgment approving the settlement. The Court dismisses with prejudice the Litigation against the underwriters defendants, PaineWebber, Furman Selz and CIBC. That day, the Court further entered the Amended Final Order and Judgment for the Outside Director settlement. There was an earlier partial settlement with Outside Directors defendants in the amount of $750,000 in cash.
By the Notice of Partial Settlement of Class Action and Settlement Hearing for the case Griffith v. PaineWebber, Inc., Master File No. 99 Civ. 2292, dated October 17, 2002, a settlement fund has been established in the amount of $1,500,000 in cash to settle allegations against UBS PaineWebber Inc. and the syndicate of Underwriters. A settlement hearing will be held on January 10, 2003, to determine whether to approve the proposed Partial Settlement.
According to the docket, on December 18, 2001, the Court entered the Order by U.S. District Judge Victor Marrero consolidating several cases into lead case number 98cv5686. The Court also consolidated several cases into lead case number 98cv7161. Further, case numbers 99cv2292 and 99cv9425 shall remain unconsolidated and all parties to these actions shall continue to file all official Court documents referencing those case numbers.
On March 26, 1999, a plaintiff filed a federal securities class action complaint in the U.S. District Court for the Southern District of New York captioned Griffin v. PaineWebber, Inc., et al., No. 99 Civ 2292, on behalf of a class of purchases of Livent Stock in or traceable to the public offering of Livent Stock dated March 27, 1996. PaineWebber was a lead underwriter of Livent’s public offering of Livent Stock commencing on or about March 27, 1996 and has not been named as a defendant in any criminal and/or SEC enforcement actions. The complaint alleged that PaineWebber, Furman Selz, and CIBC violated Sections 11 and 12(a)(2) of the Securities Act of 1933, 15 U.S.C. §§ 77k and 77l(a)(2), in connection with an offering of Livent Stock on March 27, 1996.
On October 9, 1998 and March 26, 1999, the following federal securities class action complaints were filed in the Court on behalf of a class of investors who purchased Livent 9 3/8% Senior Unsecured Notes Due 2004 during the period from October 10, 1997 to August 10, 1998: King v. Livent, Inc., et al., No. 98 Civ. 7161 and King v. Drabinsky, et al., No. 99 Civ. 2296. On June 18, 1999, the Court consolidated
these actions under the caption In re Livent, Inc. Noteholders Securities Litigation, Master File No. 98 Civ. 7161; appointed Lead Plaintiffs; and appointed Lead Plaintiffs’ Counsel. Further, on June 29, 2001, the Court ordered the consolidation of the remaining allegations in Rieger, et al v. Drabinsky, et al., No. 99 Civ. 9425, with In re Livent, Inc. Noteholders Securities Litigation, Master File No. 98 Civ. 7161.
The original complaint filed on August 11, 1998, charges Livent and certain officers and directors of the Company during the relevant time period with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that defendants issued a series of materially false and misleading financial
statements concerning the Company's revenues, expenses and capitalized costs.
Because of the issuance of a series of false and misleading statements, the
price of Livent common stock was artificially inflated during the Class Period.
In particular, the complaint alleges that on or about August 10, 1998, prior
to the opening of the market, the Company announced that it would be forced to
restate earnings for 1996, 1997, and the first quarter of 1998 as a result of
"serious irregularities in the Company's financial records . . . such as
improper recognition of revenue, and the failure to record . . . expenses." In
response to Livent's announcement, trading in the Company's common stock was
halted and has not resumed trading.