According to the Company’s FORM 10-K For The Fiscal Year Ended December 31, 1998, in September 1997, the Company settled the consolidated securities class action lawsuit relating to the restatement of our financial statements. In September 1998 the Company consummated the Court-approved settlement and paid $30 million in cash to the class plaintiffs.
As reported by the Company’s FORM 10-K For The Fiscal Year Ended: December 31, 1996, during October, November and December 1996, the Company and certain of its directors and officers were named as defendants in eleven lawsuits brought in
the United States District Court for the District of Connecticut by parties
which seek to represent classes of stockholders who purchased shares of the
Company's common stock during different periods between January 1994 and
September 1996, or exchanged shares in a merger transaction completed in January
1996. These lawsuits advance claims under various provisions of the federal
securities laws and the common law and assert that various misleading
disclosures were made concerning the Company's financial performance and
position and other related circumstances during the periods described. The
lawsuits followed and are predicated upon the Company's announcements in
September and October 1996 that it intended to restate certain prior financial
statements. On February 10, 1997, the Company filed Forms 10-K/A with the
Securities and Exchange Commission (the "SEC") reflecting restated financial
statements for the years 1992 through 1995. These matters have been consolidated
into a single proceeding.
In November 1996, a shareholder derivative action was filed in the United States District Court for the District of Connecticut, purportedly on behalf of, and for recovery by, the Company, which is named as a nominal defendant.
Further, according to the SEC filing, in December 1996 and January 1997, the Company and certain of its directors and officers were named as defendants in two largely identical lawsuits brought in the Superior Court of Santa Clara County, San Jose, California. These lawsuits have now been consolidated. The lawsuits arise out of the stock merger between the Company and Inmac on January 25, 1996. The claims are generally similar to those being asserted in the consolidated class action described above.
The original complaint charges MWI, and two of its officers, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by, among other things, misrepresenting material information concerning the company's financial statements. On Sept. 30, 1996, MWI announced that it was "likely to restate its financial results for the 1994 and 1995 fiscal years" because it had discovered "errors in its accounting procedures." As a result of having to restate its financial results for the past two years, the company reported that it was likely to incur a charge of approximately $18 million after tax. Because of the issuance of a series of false and misleading financial statements, the price of MWI stock was artificially inflated during the Class Period.